Aro Mfg. Co., Inc. v. Convertible Top Co., 377 U.S. 476 (1964)
Aro Manufacturing Co., Inc. v.
Convertible Top Replacement Co., Inc.
No. 75
Argued February 17, 1964
Decided June 8, 1964
377 U.S. 476
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
Syllabus
Respondent was the assignee of certain territorial rights in a combination patent for a top structure for convertible automobiles. The patent covered only the combination of several unpatented components, and made no claim to invention based on the fabric used in the top structure. Top structures using the patented combination were included in 1952-1954 cars made by General Motors Corp., pursuant to a patent license, and by Ford Motor Co., which had no license during that period. Respondent filed an infringement suit against petitioners, who, without a license, made and sold replacement fabrics to fit cars using the patented top structures. The patent owner (respondent’s assignor) notified petitioners on January 2, 1954, that petitioners’ sale of fabrics to fit Ford tops would be contributory infringement. On July 21, 1955, Ford paid the patent owner $73,000, and it was agreed that Ford, its dealers, customers and users, were released from all claims of infringement of the patent, other than with respect to "replacement top fabrics." The patent owner reserved the right to license the manufacture, use, and sale of such replacement fabrics under the patent. Respondent’s claim of contributory infringement was upheld in the District Court and the Court of Appeals. That holding was reversed here (365 U.S. 336) on the ground that the fabric replacement was permissible "repair" and not infringing "reconstruction," so that there was no direct infringement by the car owner to which petitioners could contribute. On remand, the District Court dismissed the complaint as to both General Motors and Ford cars . The Court of Appeals reinstated the judgment for respondent with respect to Ford cars, holding that, since Ford had not been licensed to produce the top structures on those cars, petitioners’ sale of replacement fabrics for them constituted contributory infringement even though the replacement was merely "repair." The Court of Appeals thus concluded that its "previous decision in this case was not reversed insofar as unlicensed Ford cars are concerned."
Held:
1. This Court’s previous decision did not reverse the Court of Appeals’ holding as it applied to Ford cars. P. 480.
2. Persons who purchased cars from Ford, which infringed the patent by manufacturing and selling them with the top structures, likewise infringed by using or repairing the top structures, and the supplier of replacement fabrics for use in such infringing repair was a contributory infringer under § 271(c) of the Patent Code. Pp. 482-488.
3. A majority of the Court is of the view that § 271(c) requires knowledge by the alleged contributory infringer, not merely that the component sold by him was especially designed for use in a certain machine or combination, but also that the combination for which the component was designed was both patented and infringing. Pp. 488-493.
(a) This knowledge requirement affords petitioners no defense with respect to replacement fabric sales after January 2, 1954, since they then had been notified of Ford’s infringement. Pp. 489-491.
(b) Petitioners are not liable for contributory infringement with respect to sales before that date, absent a showing on remand of their previous knowledge of Ford’s infringement. P. 491.
4. The patent owner’s attempt, in the agreement with Ford, to reserve the right to license future replacement sales was invalid, since he cannot, in granting the right to use patented articles, impose conditions as to unpatented replacement parts to be used with those articles. After July 21, 1955, Ford car owners had authority to use and repair the patented top structures; hence, they were no longer direct infringers, and hence petitioners, as sellers of replacement fabrics for such use and repair, were not contributory infringers. Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S. 336, followed. Pp. 496-500.
5. The agreement with Ford did not eliminate petitioners’ liability for sales prior to July 21, 1955, for, although a contributory infringer is a species of joint tortfeasor, the common law rule by which a release of one joint tortfeasor necessarily released another is not applied to contributory infringement. Pp. 500-502.
6. For the guidance of the District Court, four Justices express the following views to the effect that the agreement of July 21, 1955, limits the damages that respondent may recover for the pre-agreement infringement:
(a) In contributory infringement cases, as in other instances of joint tortfeasors’ liability, payment by one joint tortfeasor diminishes the amount that may be recovered from another. P. 503.
(b) Under 35 U.S.C. § 284, only damages, or loss to the patent owner, are recoverable for infringement, and not the infringer’s profits. Pp. 503-507.
(c) Respondent’s damages should not be measured by a royalty on petitioners’ sales of replacement fabrics, since respondent could never have licensed those sales, which involved unpatented materials to be used in the mere repair of patented articles. Pp. 507-509.
(d) If the payment by Ford to the patent owner was the equivalent of the royalties the patent owner would have received by licensing Ford in the first instance, petitioners would be liable only for nominal damages. Pp. 512-513.
312 F.2d 52 reversed in part, affirmed in part, and remanded.