Commercial Law Part 19

Consequently, the Federal Const.i.tution gives the exclusive right to Congress to "promote the progress of science and useful arts by securing for limited times, to authors and inventors, the exclusive right to their respective writings and discoveries." The patent office is located in Washington, and here the Commissioner of Patents has his official office, and applications for all patents are made through him, and he is authorized to establish regulations for the granting and issuance of patents. The duration of a patent right depends, of course, upon the statute. At the present time, the period is seventeen years, and at the end of that time, the person holding the patent must yield up his monopoly and all that pertains to it. A patent is in the nature of a contract, and the United States Supreme Court has said "The true rule of construction in respect to patents and specifications, and the doings generally of inventors, is to apply plain and ordinary principles to them, as we have endeavored to on this occasion, and not, in this most meta-physical branch of modern law, to yield up to subtleties and technicalities, unsuited to the subject, and not in keeping with the liberal spirit of the age, and likely to prove ruinous to a cla.s.s of the community so inconsiderate and unskilled in business as men of genius and inventors usually are." A distinction is usually made between pioneer patents, and patents which are merely improvements on one already issued. The former are always given a liberal interpretation, while the latter should be strictly construed.

ELEMENT OF NOVELTY.--It is the element of novelty which gives rise to the right to a patent. It is not possible to discuss in this limited s.p.a.ce, the countless decisions upon this point. A thing may be novel and ent.i.tled to a patent, although very old. Some lost art of the Egyptians is re-discovered by an American. Although the idea is several thousand years old, to all practical purposes it is new, and the inventor would be ent.i.tled to a patent. Like any other property, an inventor's right may be lost by abandonment. Thus, where an inventor taught a large number of people, with no suggestion that the thing was an experiment, and received pay for his instruction, the court held that this const.i.tuted an abandonment of his claim, and he was not ent.i.tled to a patent.

INFRINGEMENTS.--A suit may be maintained by the owner of a patent against one who infringes, and as this is a matter under the United States laws, all patent suits are tried in the Federal courts. A patent right is personal property, and upon the death of the owner, goes to his personal representative. Patent rights, like other personal property, may be a.s.signed and sold.

SALE OF PATENTED ARTICLES.--In recent years, many cases have arisen over the question whether the manufacturers of patented articles are ent.i.tled to impose conditions respecting the use of their manufactured articles by purchasers. Early cases seem to support the view that, as the theory of a patent was that of a monopoly, these conditions would be upheld even after the patented articles came into the hands of a purchaser.

Decisions of the United States Supreme Court, however, have tended the other way. So, attaching a notice to a patented article, stating that the article is licensed for sale and use at a specified price, and that the purchase is an acceptance of these conditions, and that in the case of a violation of this restriction, all rights revert back to the patentee, cannot convert an otherwise apparently unqualified sale into a mere license to use the invention. In Bauer v. O'Donnell, 229 U. S. 1, the Supreme Court said: "The right to vend conferred by the patent law has been exercised, and the added restriction is beyond the protection and purpose of the act. This being so, the case is brought within that line of cases in which this court, from the beginning, has held that a patentee, who has parted with a patented machine, by pa.s.sing t.i.tle to a purchaser, has placed the article beyond the limits of the monopoly secured by the patent act."

COPYRIGHTS.--A copyright is the exclusive privilege of printing, or otherwise multiplying, publishing and selling copies of literary or artistic productions. The nature of a copyright is thus defined by the United States Supreme Court, in the case of Caliga v. Newspaper Co., 215 U. S. 158: "Statutory copyright is not to be confounded with the common law right. At common law, the exclusive right to copy existed in the author until he permitted a general publication. Thus, when a book was published in print, the owner's common law right was lost. At common law, an author had a property in his ma.n.u.script, and might have an action against any one who undertook to publish it without authority.

The statute created a new property right, giving to the author, after publication, the exclusive right to multiply copies for a limited period. This statutory right is obtained in a certain way, and by the performance of certain acts which the statute points out. That is, the author having complied with the statute, and given up his common law right of exclusive duplication, prior to general publication, obtained by the method pointed out in the statute an exclusive right to multiply copies and publish the same for the term of years named in the statute.

Congress did not sanction an existing right; it created a new one."

PROPERTY RIGHT IN IDEAS.--The doctrine that a person has a property right in his ideas has never been recognized, either by common law or by statute. To ill.u.s.trate: If A, in the course of a conversation with B, gives his idea of what would be a brilliant thought to work up into a detective story, and B, possessing some literary ability, takes the idea and writes a successful detective story, he is ent.i.tled to the profits secured from the sale of the book, and there is nothing that A can do about it. The idea which A handed to B has been put by B into such form that it is practicable to allow B to copyright it, and protect his property right in the story. There is no practical way to protect a mere idea.

EFFECT OF COPYRIGHT STATUTES.--One must bear in mind the effect of copyright statutes on common law rights. At common law, an author has a property in his ma.n.u.script, and may obtain redress for any attempt to deprive him of it, and the copyright act provides that nothing in the act shall limit the right of the author, at common law, or in equity, to prevent the copying, publication or use of an unpublished work, without his consent and it gives him the right to damages should this be done.

At common law, the author of any literary composition had an absolute property right in his production, and he could not be deprived of it so long as it remained unpublished. Interesting questions have arisen in regard to the nature of the property rights in letters. The question as to the rights of the sender and the recipient are frequently troublesome. The rights of the writer consist in the power to make or restrain a publication by the recipient, but he cannot prevent a transfer. The rights of the recipient are those of unqualified t.i.tle in the material on which they are written. He has the right to keep them, to read them, and show them to a limited circle of friends, somewhat in the same way as a family picture alb.u.m might be used.

PROPERTY RIGHT IN INFORMATION OR NEWS.--Another interesting question is as to whether there can be any property right in information or news which has been collected at great expense by the a.s.sociated Press or some similar organization. The most important case on this question is that of the International News Co. v. the a.s.sociated Press, 248 U. S.

215. The a.s.sociated Press, organized in New York, is a corporation created for the purpose of collecting news and distributing it to about 950 newspapers at an annual expense of about $3,500,000. The International News Service was a corporation organized in New Jersey to collect and sell news to a chain of newspapers. The complaint was made by the a.s.sociated Press that the International News Service was engaged in pirating its news in three ways: (1) By bribing employees of newspapers, published by complainant's members, to furnish a.s.sociated Press news to defendant, before publication, for transmission by telegraph and telephone to defendant's clients, for publication by them; second, by inducing a.s.sociated Press members to violate its by-laws and permit defendant to obtain news before publication; and, third, copying news from early editions of complainant's newspapers, and selling it, either bodily or after rewriting it, to defendant's customers. The court held that news should be regarded as quasi-property, and that it was unfair compet.i.tion in business for the International News Service to take from newspapers, which are members of the a.s.sociated Press, news furnished by it, and refused to modify the injunction issued by the District Court restraining any taking or using of the a.s.sociated Press news, either bodily or in substance, from bulletins issued by the a.s.sociated Press, or any of its members, or from editions of its newspapers, until its commercial value to the complainant and all of its members had pa.s.sed away.

APPLICATION FOR COPYRIGHT.--The formality of securing a copyright is comparatively simple. The register of copyrights, in the library of Congress at Washington, furnishes a blank which the applicant fills out and returns, giving the required information, and on or before the first day of publication, the applicant must send two copies of the copyrighted book to the library of Congress. The copyright is good for twenty-eight years, with a right to renewal. The works for which copyrights may be secured may be cla.s.sified as: (a) Books, including composite and cyclopedic books, directories, gazetteers, and other compilations; (b) periodicals, including newspapers; (c) lectures, sermons, and addresses, prepared for oral delivery; (d) dramatic or dramatic-musical compositions; (e) musical compositions; (f) maps; (g) works of art, models or designs for works of art; (h) reproductions of a work of art; (i) drawings or plastic works of scientific or technical character; (j) photographs; (k) prints and pictorial records. There are certain things, which, while technically they are under the cla.s.sification we have given, are not subject of copyright. The opinions handed down by the judges of all of our courts, although they are in the form which would ordinarily permit copyright, are not subject of copyright because of the general principle of law that a judge receives a stated annual salary and cannot, therefore, have any pecuniary interests in the fruits of his judicial labors. This does not mean, however, that the opinions of the United States Supreme Court, for example, are not to be found in a copyrighted book. The Supreme Court Reporter, which is one of the systems of reporters published by the West Publishing Co. as a purely commercial enterprise, is copyrighted by that company. This is because of the fact that the editorial staff of the West Publishing Co. prepares a syllabus for each opinion, an exhaustive index in each volume, and a table of cases, and all of this matter arranged by that company, is subject to copyright, and they have the right to use the opinions of the Supreme Court the same as any other publisher would have. Again, a copyright might be refused on the grounds that the book on which the copyright was sought was an immoral or obscene writing, and therefore not ent.i.tled to protection of the copyright law. The word "Copyrighted" accompanied by the name of the copyright proprietor should appear on the page opposite the t.i.tle page, or if the article copyrighted is a picture, the act provides that the device, accompanied by the initials or the symbol of the copyright proprietor, shall appear on the article.

SUBJECTS OF COPYRIGHT.--In the cla.s.sification we have just given, mention is made of lectures, sermons, etc., as being the subject of copyright. It is held, however, that a lecture, delivered orally to a cla.s.s of students, is not published to the extent that the instructor loses his right to it, although the students may be allowed to make notes for their own use. In the same way, the artist does not lose his common law copyright by an exhibition of his pictures in his studio or in a public gallery where they are placed for sale. Similarly the public presentation of a dramatic production does not deprive the owner of his rights in it. The reason for this is that at common law the public performance of a play does not mean an abandonment to the public generally.

TRADE MARKS AND TRADE NAMES.--A trade mark or trade name is a mark or symbol which the tradesman puts upon his goods, so that they may be identified and known by the public generally. A trade name differs from a trade mark in that it is descriptive of the manufacturer himself, and involves the individuality of the maker. Statutes will be found covering the registration of trade marks and trade names, but the protection which the law affords the owner of these is not confined to a statute alone. It is generally held that a trade mark, subject to some qualifications, arises without the aid of any statute.

SUBJECT MATTER OF TRADE MARK OR TRADE NAME.--The question as to what is the subject-matter of a trade mark or a trade name, can only be determined by a careful reading of the cases. A trade mark may consist of a name, a symbol, a letter, some arbitrary form, or a newly-coined word. Pictures of animals, coats of arms, and the like, are frequently used. No trade mark can be obtained by the mere use of a color or generally a geographical term, nor can a trade mark be obtained from the form of a package in which goods are packed, and generally, mere letters and numbers cannot form a trade mark, although the arbitrary combination of numbers, such as "Babbitt's 1776" may be a valid trade mark.

NAMES NOT VALID TRADE MARKS.--Generic names, and merely names of articles, are not valid trade marks, as "Extract of Wheat," and "New York Cough Remedy." A trade name of a firm, a corporate name, or the name of a publication, although they are not strictly trade marks, are, nevertheless, of the same nature as a trade mark, and will be protected in the same manner.

UNFAIR COMPEt.i.tION.--The most common way in which trade marks and trade names become the subject of litigation, is in connection with unfair compet.i.tion. By this term we mean, ordinarily, the imitation by one person, for the purpose of deceiving another, of the name, device, or symbol used by a business rival. The courts act in such cases upon the theory that the public should be protected, and should not have other goods p.a.w.ned off on it in place of something else which a person thinks he is getting. This matter of unfair compet.i.tion is the subject of much litigation in the courts, and one or two ill.u.s.trations will show how the question arises. For example: In an English case, decided in 1897, the plaintiff had manufactured and sold a relish which was made under a secret recipe and was sold under the name "Yorkshire Relish." The defendant then put a sauce on the market resembling it, and sold it under the name of "Yorkshire Sauce." The court held that the plaintiff was ent.i.tled to an injunction. In the case of the International Silver Co. v. the Rogers Co., 66 N. J. Equity 119, the court enjoined the use of the word "Rogers" in the corporate t.i.tle of the William H. Rogers Corporation, on the ground that its use was a part of the proceedings by which the public were deceived. In this case a manufacturer of silverware, in Plainfield, N. J., was attempting to trade upon the reputation of the "1847" brand of plated silver made by the Rogers Company of Connecticut, which company was at the time of the action, a const.i.tuent part of the International Silver Co. The Connecticut Company had built up a large and good reputation by a long period of sales of its silverware to the public under its trade devices, and the use of its business name. The New Jersey Company was simply attempting to trade on that reputation, which is almost always the case in unfair compet.i.tion.

CONFLICT OF LAW.--Although we have referred to the uniform legislation in the various topics of commercial law which we have been considering, there is still much in the subject of conflict of law which concerns the student of commercial law. International law is commonly divided into two branches, public and private. Public is that which regulates the political intercourse of nations with each other; private, that which regulates the comity of States in giving effect in one to the munic.i.p.al laws of another relating to private persons. Conflict of law is one division of the broader subject of international law and is frequently called private international law. In the sense in which we are now using the term, the various States of the Union are considered as foreign to each other. The problems embraced in this topic and their bearing on commercial law may be more fully appreciated if we take a simple ill.u.s.tration. A stock broker with offices in New York City seeks to sell the stock of a new oil mining company to a purchaser in Indiana. The sale is one which is not allowed by the Indiana "blue sky" law. New York has no such law. The sale is effected by means of circulars and correspondence between the New York broker and the Indiana purchaser. Is this transaction to be governed by the law of Indiana or of New York?

Its validity will depend upon our answer to that question and this is the type of question one has to answer on the subject of conflict of law. With approximately forty different "blue sky" laws in the country at present, and the great number of stock transactions carried on between the States, the importance of this topic may be appreciated.

Again, even where we have a uniform act as, for example, the Uniform Negotiable Instruments Act, there are still differences in the law in some States. Each statute must be interpreted by the courts, and although the judges are sincere in their efforts, it can not be expected that we will always have a uniform interpretation of the same act by the courts in each and every jurisdiction of the United States.

FUNDAMENTAL PRINCIPLES.--There are several fundamental principles we should keep in mind before we turn to the specific branches of commercial law as affected by our topic. The term comity is one of common use in conflict of law and is defined as the recognition which one nation or State allows within its territory to the legislative, executive, or judicial acts of another nation or state. Comity is not a matter of right, but a courtesy, and one country may exercise its right and prohibit citizens of other countries from suing in its courts. Of course the various States of the United States are not as completely free in this matter as separate countries, because of the provision in the Federal Const.i.tution guaranteeing to the citizens of each State all the privileges and immunities of citizens in the several States. There are still many questions which are not affected by the Federal Const.i.tution. For example, a suit is brought in New Jersey upon a contract of suretyship made in New York by a wife for her husband. There is a statute in New Jersey prohibiting a married woman from doing this.

New York has no such statute. Shall the New Jersey court enforce the contract which the parties made in New York but which they could not have made in New Jersey? Under the principle of comity a New Jersey court has held valid such a contract. Again, it is entirely conceivable that a person living in Turkey might make a binding contract to marry three women at the same time. Suppose the Turk before the time for performing the contract arrives, comes to New York and then refuses to marry the three women. Could they sue him for a breach of contract in the New York court? Clearly not. Here they would be asking the New York court to enforce a contract which while admittedly valid, when made in Turkey, is decidedly against the public policy of any monogamous country. Comity being a courtesy, not a right, would not require a New York court to recognize the Turkish contract. In our ill.u.s.tration of the wife acting as surety, no question of public policy was involved and hence there was no impropriety in New Jersey recognizing as valid her contract, although such a contract could not have been made within the State of New Jersey.

CONFLICT OF LAW AS RELATING TO THE STATUS OF PROPERTY.--As we have pointed out heretofore, property is divided into real property and personal property. Reference should be made to the distinctions between these two kinds of property as described in a preceding chapter. Suppose A dies intestate in Texas owning real property in New York. The law relating to the descent of real property is different in Texas from that in New York. A's heirs wish to know by which law this New York real estate will be governed. It is almost universally recognized that all matters concerning the t.i.tle and disposition of real property are determined by what is known as the lex loci rei sitae, that is, the law of the place where the property is situated. Accordingly the heirs in Texas would be governed by the law of the State of New York and, similarly, if A had also owned property in Illinois, that property would be governed by the Illinois law. Suppose, also, A had owned $50,000 worth of stock in various corporations and he kept one-half of this stock in his safe deposit box in Galveston and the other half in New York City. While the dominion of a State over personal property within its borders is complete, nevertheless by virtue of the principles of comity, the rule has been recognized almost from time immemorial that personal property is governed by the law of the domicile of the decedent at the time of his death. Hence A's stocks (and bonds for that matter) would be divided according to the law of Texas whether they were in his safe deposit box in Galveston, New York City, or Chicago. It follows, when no rights of creditors intervene, that the law of the domicile of the testator will control in regard to his will of personal property, and the law of the place where the real property is situate will control in regard to it.

CONFLICT OF LAW AS RELATING TO CONTRACTS.--It is a general principle of contract law that the construction and validity of a contract is governed by the lex loci contractus, the law of the place where the contract is made. When the contract is made in one jurisdiction and is to be performed in another, the question becomes more difficult. The Supreme Court of the United States, in Scudder v. Union Nat. Bank, 91 U.

S. 406, has laid down the following rules in reference to the law governing contracts in cases in which the place of making and the place of performance are not the same. "1. Matters bearing upon the execution, interpretation and validity are determined by the law of the place where the contract is made; 2. Matters connected with the performance are regulated by the law of the place where the contract by its terms is to be performed; 3. Matters relating to procedure depend upon the law of the forum (i. e., the court where the case is heard)." These three general rules have been adopted and applied by many jurisdictions in a long line of cases involving every conceivable kind of contract. But perhaps it is even more generally stated, when the contract is to be performed in a place other than the place where it is made, that the law of the place where the contract is to be performed will determine the validity, nature, obligation and effect of the contract, or, in other words, in case of conflict the lex loci solutionis (the law of the place of performance) will prevail over the lex loci contractus. Although these statements at first seem somewhat contradictory, we may always apply another rule which is a sound test for the determination of the proper law to be applied. We may properly say that the intention of the parties should control and it is generally agreed that the law of the place where the contract is made is, prima facie, that which the parties intended to govern the contract, and in the absence of a contrary intention ought to control. It frequently happens that a contract made in one State is sued upon in the courts of another State. The law governing the procedure in the trial of this case will be the law of the forum, that is of the State where the case is tried, regardless of what the law may be on the same matter in the State where the contract was made. There may be, for example, a peculiar rule as to a wife's being able to testify on the contract in question. This rule will be enforced by the court although no such rule existed in the State where the contract was made. There is no great hardship in the application of such principles because the courts of the State where the contract was made are open to the parties, and if they wish to avail themselves of the services of a court in a different jurisdiction they must take it as they find it with its rules of procedure.

ILl.u.s.tRATION.--There is another type of contract which involves the question of conflict of law to which attention should be called. The facts in the case of Fonesca v. Cunard Steamship Company 153 Ma.s.s. 553, ill.u.s.trate this point. A pa.s.senger on one of the steamships of the Cunard Steamship Company bought a ticket in Liverpool for Boston and on the ticket was a clause providing that the steamship company should not be liable for any damage to a pa.s.senger's baggage during transit, regardless of whether the steamship company was negligent in handling the baggage. When the pa.s.senger arrived in Boston, and her trunk was delivered, it was found that the contents had been damaged by sea water due to the steamboat company negligently leaving a porthole open. The pa.s.senger sued, and the Ma.s.sachusetts court held there could be no recovery for the damage, for, although such a clause exempting a carrier for his negligence was not valid under the Ma.s.sachusetts law (and in fact the law of practically all American jurisdictions), nevertheless, since the law of England permits such a clause, and this was an English contract, the ticket having been bought in Liverpool, the pa.s.senger was bound by the terms of her contract. There are many kinds of contracts of transportation of baggage, of pa.s.sengers and of telegraph messages, involving the carrying out of such contracts in many different States.

Not all of the decisions in the various States of this country are harmonious. We must expect to find many such problems in business and the answer is often one that requires most careful study on the part of a lawyer.

CONFLICT OF LAW AS RELATING TO NEGOTIABLE PAPER.--There is not so large a field for questions of conflict of law to come up in negotiable paper as in some of the other topics we have been considering. Forty-seven States have now pa.s.sed the Uniform Negotiable Instrument Law. But, as we have pointed out, the interpretation of this law in the various States is not invariably uniform. Suppose a promissory note has six indorsers.

Every indors.e.m.e.nt is governed by the law of the State where it was made, and should there be a different law in this matter, we would at once have a question in conflict of law. Again, in determining the negotiability of a doc.u.ment made in one place and payable in another, we have a further question in conflict of law. The authorities do not agree here although perhaps we may say the majority hold that the law of place or payment controls. These problems will be considered in the text-book on Negotiable Instruments.

CONFLICT OF LAW AS RELATING TO INTEREST AND USURY.--We find a variety of usury laws throughout the United States. Some few States allow the lender to charge any rate of interest. Others allow a fixed rate, usually 6%, and provide that the lender forfeits both princ.i.p.al and interest if he charges more. Still others allow a fixed rate and provide that interest only is forfeited if a higher rate is charged. It is easy to see that a contract made in one State may be sued upon in another State and the usury laws of the two States may be entirely different. We may say as a general rule that usury laws do not offend any principles of public policy. There is nothing wrong in asking a New York court, where the legal rate of interest is 6%, to enforce a contract made in a State where a higher rate is allowed. On the other hand, no New York court would allow citizens of New York simply to date a contract Boston, Ma.s.sachusetts, and provide for a 10% interest rate, thereby hoping to evade the New York Usury law, when, except for the date on the contract, it was in reality wholly a New York contract.