Response or Comment
In the case of Motion Picture Patents Co. v. Universal Film Co., 37 Sup. Ct. 416, the Supreme Court has just rendered a decision which reverses the much discussed case of Henry v. Dick Co., 224 U. S. 1. The opinion was by a divided court, however, as three of the justices dissented, and Justice McREYNOLDS "concurred in the result" only. It can, therefore, hardly be said to settle the ultimate rule as in contradiction to that followed in Henry v. Dick Co., and discussion of the case is of something more than mere academic value. The facts were that the plaintiff was owner of a patent covering a necessary part of the mechanism on moving picture projecting machines. This particular device was of such efficiency as to be in general use, to the practical exclusion of all substitutes. The plaintiff granted a license to manufacture and sell these parts, the licensee agreeing that it would not sell them except under agreement with each vendee, for himself and his assigns, that they should be used only with a certain type of film. This licensee sold a machine to an exhibition company which, in turn, transferred it to the defendant, the Prague Amusement Company. Thefe was no privity of contract between this defendant and the plaintiff, but the defendant took the machine with notice of the restriction. The defendant, the Universal Film Manufacturing Company, supplied films to the Prague Company for use on the machine, having itself been notified of the restriction. The question raised was whether the restriction upon the use of the machine was enforcible against one not a party to the agreement, but who had notice of it.
Waite, John B. "Limitations Upon the Use, After Sale, of Patented Articles." Mich. L. Rev. 15, no. 7 (1917): 581-4.