Henry v. A.B. Dick Co.

Henry v. A.B. Dick Co. was a 1912 decision of the United States Supreme Court that upheld patent licensing restrictions such as tie-ins on the basis of the so-called inherency doctrine—the theory that it was the inherent right of a patent owner, because he could lawfully refuse to license his patent at all, to exercise the "lesser" right to license it on any terms and conditions he chose. In 1917, the Supreme Court overruled the A.B. Dick case in Motion Picture Patents Co. v. Universal Film Mfg. Co.,

A.B. Dick owned a patent on a mimeograph machine, which was designed to print multiple paper copies of papers by exuding ink through apertures in a stencil onto paper sheets. Dick sold one of the patented machines to Miss Christina B. Skou. A plate had been fastened to the machine, reading that the machine was "sold by the A.B. Dick Company with the license restriction that it may be used only with the stencil, paper, ink, and other supplies made by A. B. Dick." Sidney Henry then sold to Miss Skou a can of ink suitable for use upon the mimeograph machine, with knowledge of the license agreement, and with the expectation that she would use the ink with the machine.

A.B. Dick then sued Henry in the circuit court for the Southern District of New York, which ruled in favor of Dick. The Second Circuit certified to the Supreme Court the question whether the conduct constituted patent infringement.

The Court ruled (4-3) that Henry's conduct was contributory infringement, in a decision written by Justice Lurton, joined by Justices McKenna, Holmes, and Van Devanter. Chief Justice Edward White, joined by Justices Hughes and Lamar, dissented. (Two justices were unavailable: Justice Harlan had died and Justice Day was absent.).

Justice Lurton noted preliminarily that Henry could not be guilty of contributory infringement unless Skou was guilty of direct infringement in using Henry's ink. "It is not denied that she accepted the machine with notice of the conditions under which the patentee consented to its use. Nor is it denied that thereby she agreed not to use the machine otherwise." The only issue was whether breach of the agreement to use only Dick's ink was patent infringement. Henry argued that the exhaustion doctrine prevented such a post-sale restriction from being enforceable. "He cannot make a sale with the condition attached that the article shall be used or disposed of in a certain manner, leaving the title, however, in the purchaser in case of a breach of the condition."

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