The master thereupon proceeded to comply with the order, and on the 6th of December, 1883, made his report to the court. That report is not contained in the record, but from references to it, and quotations from it in the opinion of the court in considering exceptions taken to it, it appears that he reported that the complainants waived all claim for profits, and relied upon the proofs produced as establish ing a fixed license fee or royalty as the meas ure of damages. After stating the testimony of the witnesses who had been examined on the point, he said that it was very difficult to determine from this evidence whether it made proof of such an established royalty or license fee as furnished a criterion upon which to esti mate complainants' damages.

procure the extension of said letters patent of fringing the said claims, as well as the dam-
November 20th, 1860, including expenses al-ages the complainants had sustained thereby.
ready incurred, as well as those that may here-
after occur, in said behalf, to be paid whether
such extension be granted or not, and in no
event is said sum, or any part thereof, to be
reclaimed from or refunded by said Moore, and
that from sums collected under said letters pa-
tent, from sales, royalties, or settlements, or
from any other source, shall first be deducted
the costs, charges and expenses of collecting
the same, including all litigation expenses, save
those of the extension application, and then the
net profits, or receipts, shall be divided among
said parties; to said Moore one fourth, said
West one fourth, and said Westcott one half
part. In case of loss or failure to realize any
profits under said patent, all litigation expenses
aforesaid are to be paid by said Westcott, said
Moore or West to be under no liabilities for
said expenses.
Said Westcott is to make no
charge for his own time spent in this behalf,
nor is said West to make any charge for his
services; said Moore's interest is to continue
during and throughout the extended term of
the patent of November 20th, 1860, should such
extension be granted;

"And whereas, in consideration of the foregoing, Isaac Kinsey and Aaron Morris, of Milton, in Wayne County, Indiana, are desirous of obtaining an interest in said letters patent, they hereby agree to and with said John M. Westcott, of the same place, to severally take an equal interest with him in the same;

"Therefore, this article of agreement witness. eth: That said John M. Westcott hereby agrees to and with said Isaac Kinsey and Aaron Morris, and does hereby set over and assign to each of them one third part of his one half interest, retaining one third part himself in said letters patent; and said Kinsey and Morris, full understanding the original agreement mentioned, do hereby agree to and with said Westcott, to [159] be at one third expense each with said West cott, jointly, as set forth in said agreement, and shall be equally entitled-and receive one third profit or proceeds, if any, in said one half interest, and in all things pertaining hereto to be governed by this and the original contract and

agreement.

"In witness whereof, we have hereunto set our hands and affixed our seals, this 10th day of November, 1874.

The proof on the subject of damages was thus stated in his report:

"It is proved that the Wayne Agricultural Company paid the royalty of $1 for one-horse machines and $2 for two-horse machines for four years-a sum which, in the absence of evidence to the contrary, may be regarded as reasonable. Mast & Co. paid between $2,000 and $3,000 in cash and conceded privileges, which Westcott estimates to have been worth as much more, for infringement. It is true Westcott threatened suit, and when money is paid under threat of suit merely as the price of peace, it furnishes no evidence of the amount or value of the real claim in dispute; but the settlement made shows that Westcott was paid something substantial for the infringement, and that the fear of litigation was a small element of the settlement itself.

Westcott says that he arrived at the amount made by Mast & Co. and other considerations by his estimate of the number of the machines which are explained in Mast's deposition. Mast says no estimate was made of the number like the one attached to his deposition to Mast of machines." "Westcott says he gave licenses & Co., and to English & Over. Mast was examined but not interrogated on that point. Mr. English, the active man in the firm of English & Över, says he does not recollect whether they took a license or not."

Notwithstanding the difficulty expressed by him, the master reported that the defendants had made and sold 800 infringing one-horse machines, and that complainants' damages on that account were $800; and that defendants had made and sold 800 infringing two-horse machines, and that complainant's damages on that account were $1,600, making $2,400 damages in full. The court, after a full consideration of the exceptions, came to the conclusion that without further evidence the complainants were entitled to only nominal damages, and entered an order that the case be recom mitted to the master, with directions to admit further evidence as to damages, and to report the same, with his conclusions of law.

"J. M. WESTCOTT. [Seal.]
"ISAAC KINSEY. [Seal.]
"AARON MORRIS. [Seal.]"
In May, 1881, the case was brought to a
hearing on the pleadings and proofs, and the
court held that the patents to Moore were valid;
that he was the original and first inventor of
the improvements specified in them, and that
the title to them was vested in the complain-
ants; that the defendants had infringed the
first and second claims of the patent of 1860,
and the sixth claim of the patent of 1861, and
that complainants were entitled to recover the
profits and gains which had accrued to the de-
fendants from the manufacture, use, and sale On the 23d of April, 1885, the master made
of the improvements specified in those claims; a second report, in which among other things
and ordered a reference to one of the masters he stated that the additional evidence taken by
of the court to ascertain, state, and report an him did not strengthen the proofs previously
account of the gains and profits which the de- made in support of the claim that the com-
fendants or either of them had received by in-plainants had established a license fee, or roy

[160

[161

[162]

Nothing could add to the force of this language. The concluding provision, that the net profits arising from sales, royalties, or set- [163] tlements, or other source, are to be divided between the parties to the assignment so as to give the patentee one fourth thereof, does not, in any respect, modify or limit the absolute 2 Pars. Cont. 502; Sawyer v. Ilammatt, 15 transfer of title. It is a provision by which Maine, 43; Price v. Bigham, 9 Harr. & J. 296. the consideration for the transfer is to be paid If a trustee conveys the trust estate in vio-to the grantor out of the net profits made; it lation of the terms of his trust, the cestui que trust may follow it into the hands of a grantee with notice, or one who takes without consideration.

were a sufficient guaranty of a judicious exer-
cise of their power of disposition.

where the charge may be fixed at the pleasure
of the owner of the patent, cannot be received
The assignment of Westcott to Kinsey and as evidence of the value of the improvements
Morris does speak of au interest possessed by patented so as to bind others having no such
him in the patents, but it explains what that agreement. The third instance is that of
interest is, viz.: one half part of the net profits an alleged license to English & Over. The
from the patents, arising from sales, royal- complainant Westcott testifies that they con-
ties, or settlements, or other source, and it re-tinued to pay as long as they were in partner-
fers to the original assignment of the patentee ship, but how much, or how long that part-
to West and Westcott.
nership continued, does not appear. And

It follows that the contention of the defend- Mr. Over, a member of that firm, does not
ants, that the complainants have not estab-recollect that it ever took a license. Westcott
lished their title to the patents, is not sus- also testifies that no other persons or corpora-
tained. The complainants do not hold the tions than those mentioned ever took any li-
property as trustees for the benefit of the pat-censes from them under the patents sued upon.
entee; they are only trustees for him of one
fourth of the profits which may be received by
them. Tilghman v. Proctor, 125 U. S. 136,
148 [31: 664, 666].

165

It is undoubtedly true that where there has been such a number of sales by a patentee of licenses to make, use, and sell his patents, as to establish a regular price for a license, that price may be taken as a measure of damages against infringers. That rule was established in Seymour v. McCormick, 57 U. S. 16 How. 480 [14: 1024], and affirmed in New York City v. Ransom, 64 U. S. 23 How. 487 [16:515]; Packet Co. v. Sickles, 86 U. S. 19 Wall. 611, 617, [22: 203, 204]; Birdsall v. Coolidge, 93 U. S. 64 [23: 802]; and Root v. R. Co. 105 U. S. 189, 197 [26: 975, 978]. Sales of licenses, made at periods years apart, will not establish any rule on the subject and determine the value of the patent. Like sales of ordinary goods, they must be common, that is, of frequent occurrence, to establish such a market price for the article that it may be assumed to express, with reference to all similar articles, their salable value at the place designated. In order that a ages against an infringer, who is a stranger to the license establishing it, it must be paid or secured before the infringement complained of; it must be paid by such a number of persons as to indicate a general acquiescence in its reasonableness by those who have occasion to use the invention; and it must be uniform at the places where the licenses are issued. Tested by these conditions, the sums paid in the instances mentioned, upon which the master relied, cannot be regarded as evidence of the value to the defendants of the inventions patented. The court below so treated them, and held that without further evidence the complainants would be entitled only to nominal dainages, and remanded the case to the master to take further evidence. He did so, but in his second report he stated that the additional evidence did not strengthen the proofs previously made in support of the claim that complainants had established a license fee or royalty which furnished a criterion by which to estimate the damages. He therefore proceeded to estimate the value of the claim or combination patented, to the defendants, who had used it in violation of the complainants' rights, and for that purpose took the [166] opinions of different persons on the subject. Of the witnesses produced by the complainants, it does not appear that any ever manufactured or used the patented machines. One of the principal witnesses stated that he had never read the patent, had never seen a drill made like that described, had no experience in the matter of licenses, and that he placed his estimate of the value of the claim patented at what

The second ground of the appellants is, we think, well taken. The master reported in his first report that the complainants waived all claim for profits arising from the manufacture, use and sale of the patented machines, and relied upon the proofs as establishing such a fixed royalty or license fee as would furnish a criterion by which to estimate complainants' damages; and, proceeding upon that view, he found from two instances, and perhaps a third instance, in which a specified sum had been paid for the use of the machines, or for the [164] privilege of making and selling them, that the complainants had suffered damages on each one-horse machine used by the defendants, of one dollar, and on each two-horse machine used by them, of two dollars. One of the instances relied upon was that of the Wayne Agricult-royalty may be accepted as a measure of damural Company, which had paid the sums named for the use of the machines for four years. It is not clear when the payment was made, but it would seem that it was made in part under a threat of suit, and in part as the result of an arbitration after litigation on the subject had been commenced, and to avoid future litigation. It is clear that a payment of any sum in settlement of a claim for an alleged infringement cannot be taken as a standard to measure the value of the improvements patented, in determining the damages sustained by the owners of the patent in other cases of infringement. Many considerations other than the value of the improvements patented may induce the payment in such cases. The avoid ance of the risk and expense of litigation will always be a potential motive for a settlement. The second instance relied upon is that of a corporation by the name of P. P. Mast & Co., which had obtained a license to manufacture grain-drills and seeders at Springfield, Ohio, and to sell the same within the United States, upon an agreement to pay one dollar for every one-horse drill or seeder and two dollars for every two horse drill, provided that if the fee were paid upon the days designated for semiannual returns, or within ten days thereafter, a reduction of fifty per cent should be made from the fee. The corporation soon afterwards changed its feeding device, and thus did not infringe, and it settled for a portion of the fees; but it does not appear what they were. It is plain, without regard to the settlement had, that an agreement of this kind,

67]

[167]

FRED. B. SMITH ET AL., Appts.,

v.

JOHN E. ADAMS.

(See S. C. Reporter's ed. 167-177.)

County seat in Dakota-judicial cognizance-
limit of contesting validity of election-ju-
risdictional value, when not estimated-final
judgment.

1. The designation of the county seat of a county
in Dakota, or providing for its designation by popu-
lar election, was a matter properly belonging to the
legislative department of the territorial govern-
ment. It was not a matter by itself for judicial
cognizance.

he considered would be a fair recompense to
the inventor. The estimates of all the witness-
es of the complainants were merely conjectu-
al; that is, were made without having knowl-
edge of any saving secured either in the cost
of the machine or in the labor required for its
use, they simply stating that they considered
that the amounts named by them would be a
reasonable and fair royalty or license fee for
the patented drill. Naturally estimates found-
ed upon supposed but not known benefits were
widely apart, varying from three to six dollars
for a two-horse drill and half those sums for a
single horse drill. On the other hand, witness-
es produced by the defendants, who had ex-
amined, and some of whom had used, the pa-
tented drills, stated that they did not consider
them of any more utility than other seeding
drills in use, and that they did not bring any
greater price in the market. The master does
not appear to have given weight to the judg
ment of any of the witnesses, but concluded,
though by what process of reasoning is not per-
ceived, that seventy-five cents on each one-horse
drill and double that sum on each two-horse
drill would be the proper amount to allow; and
as he had found, though upon testimony
equally loose and insufficient, that there were
one thousand one-horse drills and an equal
number of two-horse drills, he reported that
the complainants were entitled to $2,250 as
damages. The court was not satisfied with his
conclusion, and, without stating the ground of
its action, ordered the amount to be reduced to
$1,800 as damages which the plaintiff should 6. A judgment of a lower appellate court which
recover, besides costs, and $150 fee for the mas-risdiction, and remands the case to it for further
reverses the judgment of the court of original ju-
ter, sustaining the exceptions to the report so proceedings, is not a final judgment.
far as it was inconsistent with that decree, and
in other respects overruling them.

The action of the court is subject to the same objection as the report of the master. The ruling that a royalty was established, as made in the first report, had been repudiated by it, and no evidence of the value of the invention to the defendants was adduced except the conjectural estimates stated; and they furnished no satisfactory basis for any damages, much less data, which authorized the specific finding made as to the damages for each drill used. Opinions not founded on knowledge were of no value. Conclusions from such opinions were at best mere guesses. By the decision rendered a settled rule of law was violated, that actual, not speculative, damages must be shown, and by clear and definite proof, to warrant a recovery for the infringement of a patent. As was said long ago by this court: "Actual damages must be calculated, not imagined; and an arithmetical calculation cannot be made without certain data on which to make it." New York City v. Ransom, 64 U. S. 23 How. 487, 488 [16: 515]. There was no question in this case of damages arising from lost sales, or injurious competition, for no machines had been manufactured and put on the market by the patentee, or by the complainants, his assignees.

No legal ground being shown for the recovery of specific damages for the alleged infringement of the patents, the decree must be reversed, and the cause remanded, with directions to enter a decree for the complainants for nominal damages; and it is so ordered.

2. But when the law of the Territory left the designation of a county seat to the voters of the county, and provided that the validity of the election could be contested by any competent elector of the county, the designation of a county seat under the law became the subject of judicial cognizance. takes such a form that the judicial power is capable 3. Whenever the claim or contention of a party of acting upon it, then it has become a case of controversy within the meaning of the article of the Constitution defining the limits of the judicial power of the United States.

4. The validity of an election to determine the county seat of a county in Dakota under the laws the forms prescribed by those laws, becomes a subof the Territory, when presented to the courts in ject of action within the jurisdiction of the territorial court and is subject to appeal to its supreme

court.

5. It is impossible to state any rule, by which the benefit the county may gain, or the damage it may suffer from the result of the election contested, can be estimated; therefore, there is not in the case such an amount in dispute as to enable this court to take jurisdiction of the appeal.

[No. 1498.]

Submitted March 11,1889. Decided April 1, 1889.

APPEAL from a judgment of the Supreme
Court of the Territory of Dakota, revers-
ing a judgment of the District Court of that
Territory sustaining a demurrer to complaint
in an action to set aside an election, held to set-
tle the location of a county seat.

On motion to dismiss and affirm. Dismissed.

Statement by Mr. Justice Field:

The facts disclosed by the record are briefly [168] as follows: The Political Code of Dakota, in force in 1886, in providing for the organization of counties and the location of their county seats, authorizes the Governor of the Territory, upon proper application of the voters of any unorganized county, to take measures for its organization, and for that purpose to appoint commissioners to locate the county seat temporarily, and to appoint officers of the county to hold their offices until the next general election. (Political Code, chap. 21, § 2, 3, and 4.) It then directs that, at the first general election subsequent to such organization, the legal voters of the county shall designate on their ballots the place of their choice for county seat, and that the place thus designated receiving a majority of all the votes cast shall thereafter be the county seat, but that, if no place receives a majority of such votes, the place designated as the county seat temporarily shall remain the county seat until changed as provided in a subsequent section. (Chap. 21, §6.) That section