John C. Bills, of Detroit, Mich. (Stevenson, Butzel, Eaman & Long, of Detroit, Mich., on the brief), for appellees.

Before DENISON and MOORMAN, Circuit Judges, and ANDREW M. J. COCHRAN, District Judge.

DENISON, Circuit Judge (after stating the facts as above). The question before us on this appeal is whether this claim should have been allowed against the receivership estate. It is to be assumed that the owner did reclaim the system before making, and in order to make, the new contract with Netzorg, although, in fact, Netzorg had become lessee of the building and the owner did not remove the system therefrom. It is plain that by the letter of the contract, a claim had accrued to the owner for at least as much as

the one filed. The claim can be defeated only by construing the contract as not giving the right to prove the debt after reclamation, or by holding that the contract, if construed to permit such proof, is invalid.

[1] The contract is generally similar to that which was before this court in the case of Miller Bros. (C. C. A.) 219 F. 851, L. R. A. 1916B, 1099, Ann. Cas. 1916A, 946. In that case it was thought that to give the owner the rights both to precipitate and collect the future payments and to reclaim the property would, or at least might, make the contract obnoxious to the rules against forfeiture, and that hence the contract should not be thought to give this double right, if such construction could be avoided. Thereupon it was said that, since the contract in that case was not clear and explicit in giving both rights, it would be interpreted as intending to give them alternatively. We cannot think that reasoning applicable to the present contract. That one differed substantially from this, as to this point of double right. It provided that, upon contingencies resembling those specified in the present contract, "the balance of the rental for the entire term of this lease shall be considered at once due and payable, without notice or demand on the part of the lessor; and it is also provided that the lessor may at any time, after such a breach of this lease occurs, enter the premises, take possession of such system, and thereby terminate all right and interest of the lessee in said system." After that decision, and not improbably as its result, the Lamson Company changed its form of contract so that, after providing for the precipitated maturity of future installments, it said, "and in addition thereto, the owner may enter the premises," etc. In view of this history, interpreta

tion, and subsequent reforming of this contract, it is, we think, entirely plain that it was the intent of both parties to give the owner both of these rights, not alternatively, but cumulatively.

The

[2] Hence the only question is as to the validity of the contract thus construed. decision of this court in the Miller Case might well be considered as critically depending upon the conclusion that the two rights were alternatively given, and so it might be thought that what is said about invalidity through the forfeiture element was dictum; and yet the discussion and conclusion as to the validity of a promise to pay the remaining payments in spite of re-entry, were persuasive in leading the court to take the final step, and we are not inclined to disregard, as merely dicta, the things said about validity. The present contract, however, contains material nonparallel and distinguishing features. The decision in this aspect there turned upon the analogy between the contract and a lease of real estate; indeed, that analogy had been adopted by the parties when they used the terms "lessor," "lessee," "rental," etc.; and it does not seem to have appeared in that record, either by the terms of the contract or by the proofs, that there was any lack of that analogy. In the new contract the nomenclature of a lease has been abandoned, although that would not be very important if the substance thereof were preserved. It is the theory of a real estate lease that the continuing possession is the consideration for the continuing rent, and so the right to collect future rentals, after termination of the lease and re-entry, has been denied, because there remained no consideration for the future promises. It is not characteristic of a real estate lease that the lessor at the making distinctly parts with a consideration separate from possession and which is to be repaid to him only gradually by rent installments spread over the whole period; and, if such a situation does exist, as where he makes special alterations and improvements which are useless to him on re-entry, it is not clear why he may not both re-enter and recover the damages therefor.

The contract in this case carefully specifies considerations which might not be completely made good to the owner until the last quarterly payment is received. These are (a) the cost of installing; (b) the license to use under patents; (c) the free supply of parts for repairs; and then (d) generally, the right to operate the system. For all of these things the user agrees to pay a total sum, divided into installment payments. We

25 F.(2d) 4

may well assume that the original cost of making the sale of such a system and system rights, and also the cost of installation, may be large. The value of the granted patent licenses is indefinite, and the extent of such existing licenses has an effect upon the value of the patents themselves. The obligation to furnish repair parts must be made good by the present and continuing maintenance of a stock of repairs. In addition, it appears without dispute in this case (as the court in the Miller Case for lack of convincing proofs was unwilling to assume), that the system, for the purpose of tearing out of the building and restoring to the owner, is worthless. If parts are removed with such care that they can be used elsewhere, it costs more to pay the necessary skilled labor therefor and for refinishing them than it would to make new parts; and, if the parts are torn out cheaply and carelessly, they are junk, worth less than even that removal cost. Hence it seems probable enough, if not certain, that a provision for precipitating future payments, even after reclamation, is necessary for the protection of the owner. Of course, it may work hardship to the user and excess profit to the owner in some cases, but that does not make it so generally arbitrary and in the nature of a mere forfeiture as to destroy its validity.

In another respect the analogy to a lease of real estate fails. The lessor has a single piece of real estate. He cannot multiply it. With reference to a manufactured article, he may make as many as he can find customers for. If on retaking an article once placed he sells it to another, he thereby destroys his outlet for a new sale with full profits. This feature is important also in deciding whether the recovery of the future payments, after reclamation, is so unreason able as to indicate a penalty, rather than a rightly stipulated damage.

Another distinguishing feature from the Miller Case is that this contract recognizes and stipulates the value of the credit which the user ought to have in case of reclamation. It does this under the name of the value of the user's interest, and, though this seems an inappropriate name, this credit will serve as well to represent the agreed value to the owner of the property he gets back and of the maintenance burden he escapes. [3] Upon this record we see no reason why this contract, considered broadly as one which expressly permits both a retaking for the user's default, and a precipitation and collection of the future payments, should be condemned as necessarily invalid because in

volving a penalty or forfeiture. A material part of the distributed investment cost had not been repaid, and was not recovered by the retaking; the property retaken is of lit tle if any value to the owner; a presumptively fair allowance is made to the user to cover reasonable values or savings secured to the owner by the retaking; and the owner is entitled to separate, full profits from as many systems as he can place. When com petent parties, dealing as strangers, have provided for stated damages on default, and the damages are made proportionate to the extent of the default, and probably approximate the actual damages, no reason is seen for defeating that contract.

Perhaps an attempt to collect the full amount of future payments without reduction to their present value and without taking into account the future maintenance which the owner escaped, would have an aspect of forfeiture; but here the claim is filed only for the minimum amount accruing if the user had exercised the most favorable option that to the five-year cancellationand the amended claim was not filed until after the five-year period had expired and all maintenance duty for that period had been performed. Perhaps also if the owner after default made a new contract with the successor tenant in the building whereby the owner avoided actual loss upon the retaking, the user could make out a case for equitable protection, or an aspect of forfeiture would then arise, even at law; but here in the claim filed the owner had given full credit for everything which it had been able to resell in this way. Perhaps some different rule may be applicable in bankruptcy; that we do not decide.

We have pointed out that the present case is to be distinguished from the Miller Bros. Case, both by the presence of an express covenant and by satisfactory proof that the character and reclaimable value of the property involved made inappropriate the application of the rules of real estate law. The other reported cases involving the Lamson contracts are to be distinguished at least as clearly. In Lamson v. Bowland (C. C. A. 6) 114 F. 639, there is no agreement that the owner could have both reclamation and recovery of future payments. An effort was made to work out that result indirectly; and, lacking any express agreement therefor, this effort was disapproved. In Re Quaker Drug Co. (D. C.) 204 F. 689, the lease was construed not to provide for precipitation of future payments in case of bankruptcy; no other question was involved. Re Merwin

(D. C.) 206 F. 116, is to be distinguished for the same reasons as the Miller Bros. Case. We think the claim should have been allowed as filed.

Reversed and remanded.

25 F.(2d) 8 inclusive, of the first, and claims 1 to 7, inclusive, of the second, reissue patent.

Respecting the first reissue patent, it is significant that: (a) No court ever held the claims of the original patent invalid. (b) No court ever held the original patent inoperative. (c) No court ever held that patentee had claimed more than his invention permitted. (d) Appellants unsuccessfully endeavored to bring appellee within the language of the original patent. (e) From the date of the issue of appellants' original patent to the date of the reissue patent-four years ten months-appellee was engaged in the business of manufacturing and selling the alleged infringing machine. Its predecessor had invested large sums of money in its business. (f) Appellants during this entire period knew that appellee was so engaged in manufacturing and selling these machines. (g) The claims of appellants' reissue patent are broader than the claims of the original patent, and were broadened for the sole purpose of including appellee's machine.

[1] The conditions under which the Commissioner of Patents may grant a reissue patent are defined by the statute. R. S. § 4916, or section 9461, U. S. Compiled Statutes (35. USCA § 64).1

The Commissioner of Patents is not empowered to grant reissue patents except as authorized by this section. Miller v. Brass Co., 104 U. S. 350, 26 L. Ed. 783; Mahn v. Harwood, 112 U. S. 354, 5 S. Ct. 174, 6 S. Ct. 451, 28 L. Ed. 665.

It is apparent from a reading of Judge Dennison's opision that the original patent was neither invalid nor inoperative. With equal certainty it may be stated that no contention was made that the invalidity of the original patent was due to defective or insufficient specification or to patentee's "claim

1 U. S. Compiled Statutes, § 9461: "Whenever any patent is inoperative or invalid, by reason of a defective or insufficient specification, or by reason of the patentee claiming as his own invention or discovery more than he had a right to claim as new, if the error has arisen by inadvertence, accident, or mistake, and without any fraudulent or deceptive intention, the Commissioner shall, on the surrender of such patent and the payment of the duty required by law, cause a new patent for the same

invention, and in accordance with the corrected specification, to be issued to the patentee, or, in the case of his death or of an assignment of the whole or any undivided part of the original patent, then to his executors, administrators, or assigns, for the unexpired part of the term of the original patent. Such surrender shall take effect upon the issue of the amended patent,"

etc.

ing as his own invention more than he had a right to claim." It is likewise apparent from the record that there was no error upon the part of the applicant traceable to inadvertence, accident or mistake which resulted in his securing claims which did not describe his invention.

We are unable to understand upon what theory the Patent Office proceeded in allowing this reissue patent.

[2-4] Even though the statutory requirements were met in other respects, whieh they were not, patentee's attempt to broaden his claims should, under the existing circumstances, have defeated his efforts to secure this reissue patent; for a patent cannot lawfully be reissued for the purpose of enlarging the claim unless (a) there has been a clear mistake inadvertently committed in the wording of the claim, and (b) the application for a reissue is made within a reasonably short period after the original patent was granted. Mahn v. Harwood, supra. The evidence fails to show a mistake inadvertently committed, and the application for a reissue patent was not made within a reasonable period after the grant of the original patent.

In the last-cited case, the court said: "The granting of such reissues after the lapse of long periods of times is an abuse of the power, and is founded on a total misconception of the law. Lapse of time

may be of small consequence on an application for the reissue of a patent on account of a defective specification or description, or where the original claim is too broad. But there are substantial reasons, not applicable to these cases, why a claim cannot be enlarged and made broader after an undue lapse of time. The rights of the public here intervene, which are totally inconsistent with such tardy reissues; and the great opportunity and temptation to commit fraud after any considerable lapse of time, when the circumstances of the original application have passed out of mind, and the monopoly has proved to be of great value, make it imperative on the courts, as a dictate of justice and public policy, to hold the patentees strictly to the rule of reasonable diligence in making applications for this kind of reissues."

Such

subject of investigation in many cases.
What is a reasonable time has been the
a period cannot be defined so as to fit all cas-
es, for what is reasonable in one case may
be unreasonable in another. Wollensak v.
Sargent, 151 U. S. 221, 14 S. Ct. 291, 38 L.
Ed. 137. We conclude that in the present
case the lapse of more than four years from

the date of the original issuance of the patent was unreasonable. Hoskin v. Fisher, 125 U. S. 217, 8 S. Ct. 834, 31 L. Ed. 759; Wollensak v. Sargent, supra; Mahn v. Har wood, supra; Gardner v. Herz, 118 U. S. 180, 6 S. Ct. 1027, 30 L. Ed. 158; Miller v. Bruse Co., 104 Ill. 350; Bantz v. Frantz, 105 U. S. 160, 26 L. Ed. 1013; Flame Oil Stove Co. v. Glazier (C. C. A.) 119 F. 157; Thomson-Houston Electric Co. v. Sterling Meter Co. (C. C.) 150 F. 589.

Respecting the second reissue patent No. 15874, somewhat different questions arise. [5, 6] Certain of the statutory requirements are present. To illustrate, certain claims of the original patent were declared void. Speaking of them, the court said (290 F. 669):

"With this statement of the situation, we come to his two claims of 1,265,910. We are compelled to think that they are invalid because functional. They are apparently most deliberately and skillfully drafted to cover any means which any one ever may discover of producing the result; that is, to accomplish the one thing while avoiding the other. We think they are clearly to be condemned under the rule stated in O'Reilly v. Morse, 15 How. 62, 112, 14 L. Ed. 601, Risdon v. . Medart, 158 U. S. 68, 77, 15 S. Ct. 745, 39 L. Ed. 899, and the many familiar cases applying the rule, and that they are not within the principle of the Telephone Case, 126 U. S. 1, 534, 8 S. Ct. 778, 31 L. Ed. 863. We do not mean to say that a claim which in a very general way calls for means is necessarily functional and bad-quite the contrary (Davis v. New Departure Co. [C. C. A. 6] 217 F. 775, 782, 133 C. C. A. 505); nor would we hastily condemn, for this reason, a claim which, by its functional quality, only became equivalent to that valid process claim which the inventor might have obtained through another form of his application; but a claim to a process which attempted to define the process only by its result would be no less objectionable than is a corresponding claim to a machine."

For appellants, it is urged that this language justified the Patent Office in granting the reissue patent. In other words, it is contended that applicant, through inadvertence, accident, or mistake, misdescribed his invention, and should have been permitted, as the Patent Office ruled, to surrender his old patent and secure a new one. In opposition to this argument, it is at once apparent that the invalidity of the original patent was not because "of defective or insufficient specifications or by reason of the patentee's claim

ing as his own invention more than he had a right to claim as new." Without such a showing, where is the basis for a valid reissue patent? Moreover, the error which resulted in the court's declaring the patent invalid did not arise "by inadvertence, accident or mistake" and was not "without a fraudu lent or deceptive intention" on the part of the applicant.

Judge Dennison characterized these claims as having been "deliberately and skillfully drafted to cover any means which any one ever may discover of producing the result-that is, accomplishing the one thing while avoiding the other." Such language should have informed the Patent Office that there was no "inadvertence, accident or mistake" in drawing the original claims. If the applicant deliberately and skillfully drafted his claims so as to cover any means which any one ever may discover of producing the result, could it be said that his action was inadvertent or accidental? Accidental or inadvertent action cannot be predicated upon conduct properly characterized as deliberate or designed. Certainly, as between these two parties, who were also the parties before the Court of Appeals in the Sixth Circuit, this finding is well-nigh conclusive.

True, appellants, in the effort to cover any and all means which might, during the life of the patent, become available, came within the condemnation of the rule which defeated a claim which defined a means solely by its result or its function. Seeking too much, he lost all. Nevertheless, if he did so deliberately and intentionally and successfully, he can hardly be heard to say that he acted inadvertently, accidentally, or by mistake.

There is another ground upon which this portion of the decree must be affirmed. Judge Westenhaver, in his opinion in the District Court of Ohio, described the prior art as follows:

"This prior art, known to both inventors and on the basis of which each proceeded to construct his apparatus, discloses the following general elements of each of the five patents in controversy: (1) The mixing of nitrous oxid gas and oxygen to form an anesthetic in surgical operations; (2) elastic gas bags as separate containers for nitrous oxid gas and oxygen; (3) an intervening mixing chamber to which the gas from each bag is discharged and from which it passes to the patient; (4) valve mechanism controlling the flow of the separate gases from the hags to the mixing chamber by which a definite proportion of gases going into the mixing chamber can be secured, provided the pres