Commonwealth v. Edison Elec. Light Co.

commonwealth’s appeal, no. 22. Opinion, Mb. Justice Williams: Two questions are raised in this case. The first is whether the appellee is a manufacturing company. While it might well be so regarded, if the question were an open one, we have no doubt that it does not come within the class recognized by our acts of assembly relating to manufacturing companies; and the learned judge of the court below reached a correct conclusion upon this question, for reasons given in the opinion of this court just filed in the case of Commonwealth v. Light & Power Co., ante, 105. The other question is whether any portion of the capital stock of the Philadelphia company is invested in patent rights, and for that reason exempt from taxation. The court below was of thé opinion that stock issued to the Edison Electric Light Company of New York, amounting to about forty-nine thousand dollars, out of a total capital of one hundred and forty thousand dollars, was invested in patent rights, and therefore exempt. This finding rests on the written agreement or license bearing date on the third day of February, 1887, and we are now to inquire whether the finding is sustained by the agree [140] ment. It contains a recital that the Edison Electric Light Company of New York is the owner - of many patents obtained for appliances used in the production of electricity by artificial means, its delivery to customers, and its utilization for purposes of light, heat, and power. It recites, further, the desire of the Philadelphia company to acquire an exclusive right to use such appliances in the city of Philadelphia. Then follows the grant of the desired exclusive right, but only as to the use of the appliances, and under certain conditions and limitations which show plainly the purpose of the owners of the patents to maintain their exclusive ownership in them, and their absolute control over the manufacture of the appliances, and over the manufactured articles when finished. Among these conditions is one that limits the right of the licensee to the supply of its customers on the described circuit; another, forbidding the use of the license for any other purposes than such as relate to light, heat, and power to propel stationary machinery; another, declaring the license to be personal to the licensee, and forbidding any assignment or transfer of it. Still another reserves to the New York company the right to terminate the license on any default made, resume the exclusive ownership of the territory, and grant a new license to another party covering the same exclusive right in the same territory. Under this agreement, the licensee secures the right to use the appliances made under the several patents held by the licensor, for a fixed price, to be paid in money, in its own stock, or in both; and it secures nothing more. The New York company, on the other hand, retains its exclusive ownership of all its patents, an absolute control over the manufacture of its appliances protected by the patents, and over the use and disposition of every one of the manufactured articles which its licensee uses. We have just held in Commonwealth v. D. & P. Teleg. Co., ante, 121, following Patterson v. Kentucky, 97 U. S. 501; Stephens v. Cady, 14 How. 528; Webber v. Virginia, 103 U. S. 344, that the exclusive right secured to the inventor by letters patent, is an incorporeal right, clearly distinguishable from the ownership of the instrument or appliance manufactured under and by virtue of that right; and that a lessee of the instrument or appliance acquires no title to or ownership in the patent under which it was made. In the [141] language of Justice Field, in Webber v. Virginia, supra: “ The right conferred by the patent laws of the United States on inventors, to sell their inventions and discoveries, does not take the tangible property, in which the invention or discovery may be exhibited or carried into effect, from the operation of the tax and license laws of the state.” Whether the “tangible property,” that is, the machines or appliances made and ready for use, is in the hands of the makers, of venders, lessees, or licensees, can make no difference. Such property is not a patent right, but the visible, tangible fruit of the right secured by the patent, which passes to a purchaser or lessee in precisely the same way that any other manufactured articles pass from the maker to the buyer or lessee. It is not necessary to repeat what was said upon this subject in Commonwealth v. D. & P. Teleg. Co., supra; but, for reasons given in the opinion filed in that case, we reverse the judgment as to the taxability of the stock of the appellee used to pay the rent of, or price of the license to use, the manufactured appliances of the New York company in its business in Philadelphia. Judgment is now entered in favor of the appellant, the commonwealth of Pennsylvania, for the sum of one hundred forty-seven dollars, with interest and costs in addition to the judgment entered in the court below. Tax on $49,000, capital stock, . $147.00 Int. at twelve per cent from Nov. 6, 1888, to ... Attorney general’s commission, defendant’s appeal, no. 32. Opinion, Mr. Justice Williams : This is an appeal from the same decree which we have just considered, on the appeal of the commonwealth. The only question here presented is whether the appellant is a manufacturing corporation, within the meaning of the act of 1885, exempting manufacturing corporations from the operation of the revenue law of 1879. This question is disposed of by the opinion in Commonwealth v. Light & P. Co., ante, 105, filed herewith. For reasons given in that case This appeal is dismissed, and the judgment affirmed. [142] commonwealth’s appeal, no. 23. Opinion, Me. Justice Williams : The question presented upon this appeal is identical with that presented by the appeal of the commonwealth from the judgment in the case of Commonwealth v. Elec. Light Co., in which an opinion has just been filed. For reasons there given we reverse the judgment entered in the court below, so far as it relates to the taxability of the stock of the appellee, used to pay the rent for, or the price of the license to use the manufactured instruments or appliances furnished by the Edison company in New York to the Chester company, for use in carrying on their business in the city of Chester. Judgment is now entered in favor of the commonwealth for the further sum, as follows: Tax on $15,000, capital stock, . . $60 Interest at twelve per cent, Attorney general’s commission,