the account, makes the judgment final as to the validity of the patent and as to all matters except profits and damages; but this court can give no other interpretation to the language of the court, and, in the absence of an intimation by another Circuit Court of Appeals to the contrary, would feel constrained to so hold. It expressly held that the Circuit Court of Appeals may affirm such a decree on the merits, and that when affirmed the holding becomes the law of the case, and that the Circuit Court can then only carry into effect the decision of the Circuit Court of Appeals. This being so, should the case come up on a second appeal from the final decree entered by the Circuit Court on the coming in and confirmation of the master's report, could the Circuit Court of Appeals reverse or modify its prior rulings in the same case affirming the interlocutory decree first entered and appealed from, and which also necessarily established the validity of the patent? This would be giving to the Circuit Court of Appeals in such a case the power to reverse its own decree on a given point, or all points, in the same case made at a prior term. The court said:

"Upon affirming such a decree [interlocutory decree of the Circuit Court], the Circuit Court of Appeals is not called upon to determine the effect of the affirmance, should the case be again appealed after the accounting of profits and damages has been stated and confirmed. A second appeal, moreover, can only involve matters subsequent to the decree of the Circuit Court of Appeals, for that court, after the term has passed, has no power to review, rehear, or re-examine its own decrees." And again: "The decision of an appellate court is final, and no second appeal is maintainable, except as to matters reserved or proceedings subsequent to the first appeal."

This decision seems to be approved in Smith v. Vulcan Iron Works, 165 U. S. 523, 17 Sup. Ct. 407, 41 L. Ed. 810, although the only question really decided there was that on such an appeal in a patent case the Circuit Court of Appeals may decide the case on the merits, and render or direct a final decree dismissing the bill. If it may do that, and reverse and dismiss, giving a final judgment against the complainant, why must not its affirmance of such a decree be regarded as final? If this be the law, then the affirmance of the judgment in this case under consideration by the Circuit Court of Appeals made the judgment of affirmance entered by direction of that court final, and we now have a final, and not an interlocutory, judgment, establishing and declaring the validity of the complainant's patent. If so, and if Gormly is to be held a party (in the broad sense) to that action and judgment, then there is the end of this case, for, when the strict doctrine of res adjudicata applies, the judgment is final and conclusive not only as to all questions actually decided, but as to all that might have been raised and litigated. Hence, if such be the case, the new defenses now urged, not pleaded in that prior action, cannot be urged here, as they might have been presented and passed upon then. But the Circuit Court of Appeals in the Seventh Circuit, October, 1896, did not so understand the decision in Bissell Carpet Sweeper Co. v. Goshen Sweeper Co., supra, for in Brush Electric Co. v. Western Electric Co., 76 Fed. 761, 22 C. C. A. 543—a patent case, where the

patent was upheld, and an injunction granted, and an appeal taken -the court said, as to the defense of a prior decree between the same parties regarding the same patent:

"The decree in the Toledo Case awarded a perpetual injunction, but with an order of reference to a master to ascertain the damages by reason of infringement; and for that purpose the suit, it is conceded, is still pending. It is therefore only an interlocutory decree, and not available as an estoppel in respect to any issue in these suits."

In support of this statement of the law it cited Bissell Carpet Sweeper Co. v. Goshen Sweeper Co., 72 Fed. 545, 19 C. C. A. 25, from which the above quotations have been taken, and also the following cases: Barnard v. Gibson, 7 How. 650, 12 C. C. A. 857; Humiston v. Stainthorp, 2 Wall. 106, 17 L. Ed. 905; McGourkey v. Railway Co., 146 U. S. 545, 13 Sup. Ct. 172, 36 L. Ed. 1079; David Bradley Mfg. Co. v. Eagle Mfg. Co., 6 C. C. A. 661, 57 Fed. 980, and 18 U. S. App. 349; Jones Co. v. Munger Improved Cotton Mach. Mfg. Co., 1 C. C. A. 668, 50 Fed. 785, and 2 U. S. App. 188; Richmond v. Atwood, 2 C. C. A. 596, 52 Fed. 10, 17 L. R. A. 615, and 5 U. S. App. 151; Marden v. Campbell Printing Press & Mfg. Co., 15 C. C. A. 26, 67 Fed. 809, and 33 Ū. S. App. 123; Bissell Carpet Sweeper Co. v. Goshen Sweeper Co., 19 C. C. A. 25, 72 Fed. 545.

It is not necessary to call attention particularly or in detail to the inconsistency between the Carpet Sweeper Case, above commented on, and Marden v. Campbell Printing Press & Mfg. Co., 67 Fed. 809, 15 C. C. A. 26, where it is held that the appeal from the interlocutory decree in such a case in no way affects the right to an appeal from the final decree after an accounting.

That the decree of a Circuit Court sustaining a patent, declaring infringement, and sending the matter to a master to take and state an account of profits and damages, is interlocutory, and not final, is declared by the Supreme Court in McGourkey v. Toledo & Ohio Railway, 146 U. S. 545, 13 Sup. Ct. 172, 36 L. Ed. 1079, where it is said:

or in equity establishing

"It is equally well settled that a decree the validity of a patent, and referring the case to a master to compute and report the damages, is interlocutory merely."

And also in Smith v. Vulcan Iron Works, 165 U. S. 524, 17 Sup. Ct. 410, 41 L. Ed. 810, where it is said:

"But under the judicial system of the United States, from the beginning until the passage of the act of 1891 establishing Circuit Courts of Appeals, appeals from the Circuit Courts of the United States, in equity or in admiralty, like writs of error at common law, would lie only after final judgment or decree; and an order or decree in a patent cause, whether upon preliminary application or upon final hearing, granting an injunction, and referring the cause to a master for an account of profits and damages, was interlocutory only, and not final, and therefore not reviewable on appeal before the final decree in the cause."

After a review of all the cases, this court is constrained to hold, and does hold, that the decree entered in Australian Knitting Company v. Wright's Health Underwear Co., on the affirmance of the decree of the Circuit Court by the Circuit Court of Appeals sustain

ing complainant's patent, is interlocutory, merely, and not final, as no final judgment has been entered or rendered by the Circuit Court, and the matter of the accounting is still pending before the master. That judgment may not be res adjudicata and conclusive. on the defendant here, Robert W. Gormly, for another reason: Gormly was not a party in fact to that litigation, nor was he directly interested. He was interested, but not "directly interested." Nor was he represented in that case by Wright's Health Underwear Company. That company was not his representative in any sense, nor did Gormly, the defendant here, claim under or through that company. In this suit Gormly does not claim under or through that company, or succeed to its title or right. Had that company succeeded in securing a judgment dismissing the action, such judgment might have proceeded on the ground that the device used by it did not infringe the patent in question, or it might have proceeded upon the ground that the complainant's patent was invalid for various reasons. The defendant there set up certain defenses, and pleaded certain matters as showing prior use and publication, anticipation, etc.; but it did not plead certain matters which, if established as true, would have determined that action in favor of the defendant. Those matters the defendant there sought to set up after the decision by the Circuit Court of Appeals affirming the judgment on its petition to that court asking a recall of the mandate for modification, or for an order granting leave to the Circuit Court to rehear and consider newly discovered evidence. That motion. was denied for the reason, said the court, "it has not been satisfactorily made to appear that the defendant could not have discovered the new evidence if reasonable diligence had been exercised." It therefore appears that the Circuit Court of Appeals did not consider. the defenses now set up on the merits when it affirmed the judgment, and that it declined to allow the Circuit Court to consider such defenses on the merits because of the laches of that defendant in not discovering the facts at an earlier date.

But if Wright's Health Underwear Company had secured a judgment in that action dismissing the complaint on the defenses urged in that action, would such judgment bar or estop the complainant in this action from prosecuting it against the defendant, Gormly, for making and vending the alleged infringing device? It is well settled that estoppels, to be binding or effective, must be mutual. Mack v. Levy (C. C.) 60 Fed. 752. In other words, could Gormly effectively plead such judgment as res adjudicata against the complainant? Could Gormly say (1) "The subject-matter is the same;" (2) "The parties the same;" (3) "The causes of action are the same, identical;" (4) "In that action you were bound to set up and litigate all your defenses;" and, (5) "In that action it was determined that your patent is invalid, or that the device in question does not infringe"? The judgment, if for defendant, might have proceeded upon either ground. The question thus presented would seem to be reduced to this: Is a person who is only indirectly interested in a litigation, and who is not made a party, and who is not

represented by a party to the record who represents his interest, but who comes forward and defends because it may ultimately benefit him so to do, so represented in the suit that he is, for purposes of res adjudicata, to be regarded as an actual party to the record, and to such an extent that in all actions by such complainant against him involving the same cause of complaint and all the defenses that might have been pleaded and urged by the actual defendant, but in fact were not, such matters are to be deemed to have been finally adjudicated and determined between the complainant and the person so defending?

In Litchfield v. Goodnow, 123 U. S. 549, 550, 8 Sup. Ct. 210, 31 L. Ed. 199, it was held:

"The defense of prior adjudication is disposed of by the fact that Mrs. Litchfield was not a party to the suit in which the adjudication relied on was had. At the time of the commencement of the suit she was the owner of her lands, and they were described in the bill, but neither she nor any one who represented her title was named as a defendant. She interested herself in securing a favorable decision of the questions involved as far as they were applicable to her own interests, and paid part of the expenses, but there was nothing to bind her by the decision. If it had been adverse to her interest, no decree could have been entered against her personally either for the lands or the taxes. Her lands were entirely separate and distinct from those of the actual parties. A decree in favor of or against them and their title was in no legal sense a decree in favor of or against her. She was indirectly interested in the result, but not directly. As the questions affecting her own title and her own liability for taxes were similar to those involved in the suit, the decision could be used as a judicial precedent in a proceeding against her, but not as a judgment binding on her and conclusive as to her rights. Her rights were similar to, but not identical with, those of the persons who were actually parties to the litigation."

It will be noted that the Supreme Court places the decision on the facts that, while Mrs. L. owned a part of the lands described in the bill, "Neither she nor any one who represented her title was named as a defendant," and "she was indirectly interested in the result, but not directly," and "no decree could have been entered against her." The court also quotes with approval Greenleaf's Evidence, vol. 1, § 523, "Under the term 'parties,' in this connection, the law includes all who are directly interested in the subjectmatter," and had a right to make defense, or to control the proceedings and to appeal from the judgment.

The decision in Litchfield v. Goodnow is in no wise weakened or broken by Plumb v. Goodnow's Administrator, 123 U. S. 560, 561, 8 Sup. Ct. 216, 31 L. Ed. 268. There Plumb was the actual owner of the land in question, but the title stood in the name of one Wade, and the defense was made by Plumb, the real owner-the one "directly interested." Again, Wade represented Plumb's title, and was a party on the record.

In Last Chance Mining Co. v. Tyler Mining Co., 157 U. S. 683, 15 Sup. Ct. 733, 39 L. Ed. 859, held:

“When the jurisdiction of a controversy by a court is unquestioned, and the cause proceeds to final judgment, and no review is sought for, the judgment is conclusive upon the parties to the suit as to the matters decided, but not as to matters which might have been decided, but were not."

In Etna Life Ins. Co. v. Bd. of Com'rs, 117 Fed. 82, 54 C. C. A. 468, the third headnote reads:

"Where the record is such that there is or may be a material issue or matter that may not have been raised, litigated, and decided in the former action, the judgment therein does not constitute an estoppel, unless by pleading or proof the party asserting it establishes the fact that the issue, right, or matter in question was actually and necessarily litigated and determined in the former action."

See, also, Empire S. N. Co. v. S. L. B. Co., 74 Fed. 864, 21 C. C. A. 152.

The right of the defendant to be heard in this case on his new defenses would seem to be implied from Johnson Co. v. Wharton, 152 U. S. 252, 14 Sup. Ct. 608, 38 L. Ed. 429. The syllabus is as follows:

"A judgment recovered in a Circuit Court of the United States in favor of the plaintiff by the owner of a patent right in an action against a licensee to recover royalties on sales of the patented article, where the sole defense set up was that the articles manufactured and sold by the defendant were not covered by the patent, in which the amount recovered was not sufficient to permit a review by this court, is a bar to an action in the same Circuit Court by the same plaintiff against the same defendant to recover like royalties on other like sales, where the same defense is set up, and no other, and the amount involved is sufficient to authorize a review here."

In Fayerweather v. Ritch, 195 U. S., at page 299, 25 Sup. Ct., at page 64, 49 L. Ed. 193, the court said, speaking of estoppel by judg

ment:

"But in order to make this finality rightful it should appear that the question was distinctly put in issue; that the parties presented their evidence, or at least had an opportunity to present it; and that the question was decided."

It seems to this court reasonably clear that, while Gormly is bound by the former judgment as to all questions actually raised in that case by the answer, he is not bound thereby so as to preclude him from presenting his new defenses here; that the judgment is only interlocutory; and, second, Gormly was not directly, but only indirectly, interested, and his rights and interests were not represented in that action.

In pleading defenses, it was not sufficient to merely allege that the patent of Kinsey was void. It was necessary to set up anticipation, prior use, want of patentable invention, etc., if relied on. See 3 Robinson on Patents, § 958.

The final question is that of the invalidity of complainant's patent because of the alleged new matters set up in the answer.

Burr-wheels, in the ordinary circular knitting machine, caused to rotate by the meshing of their peripheries, having teeth, so called, with the needles, co-operate with the needles in various ways for different purposes. The matters in question here relate to such burr-wheels as have some of the spaces between the blades or wings thereof filled or blocked. The patent in suit is for what is known as a "cut-presser," and defendant's device is for a "backing" wheel. The evidence shows that the one cannot do the work of the other. When the blades are arranged upon the wheel, in order to knit different patterns, it is necessary to have some of the spaces be