Carbice Corp. v. American Patents Development Corp., 283 U.S. 27 (1931), is a decision of the United States Supreme Court extending the patent misuse doctrine against tie-ins to cases in which patents were used to tie the purchase of unpatented elements of patented combinations. The Court had previously held that it was unlawful to require the purchase of supplies as a condition of a patent license, where the supplies were not claimed as part of the patented combination.
Background
American Patents Development Corp. (APDC) held a patent for a dry ice transport enclosure (shipping container), in which a smaller container of dry ice was surrounded by a freezable material (such as ice cream) being refrigerated; this arrangement was contrary to the usual packaging practice of surrounding the material being refrigerated with regular ice. The patent was not on dry ice itself, which was well known as a refrigerant, nor on the container itself, but on the combination of the container and dry ice and the freezable material. A typical claim of the patent provided:
6. A transportation package consisting of a protective casing of insulating material having packed therein a quantity of frozen carbon dioxide in an insulating container and a quantity of freezable product in freezing proximity to said frozen carbon dioxide and the gas evaporated therefrom, arranged so that said frozen carbon dioxide is less accessible for exterior heat than said freezable products.
APDC licensed the patent exclusively to Dry Ice Corp. (DIC). DIC made and sold only dry ice. It designated other firms to make and sell the patented transportation devices (see diagram of box within a box). Each invoice for the dry ice that DIC sold had this notice:
The merchandise herein described is shipped upon the following condition: That DryIce shall not be used except in DryIce cabinets or other containers or apparatus provided or approved by the DryIce Corporation of America, and the DryIce Cabinets or other containers or apparatus provided or approved by the DryIce Corporation of America shall be refrigerated or used only with DryIce.
Carbice manufactured and sold dry ice to a Mr. Marchiony (and other persons) who combined the dry ice with containers he originally bought from a supplier approved by DIC, but then he reused the containers without the consent of DIC. APDC then sued Carbice, but that court dismissed the suit on the grounds that no infringement occurred because the dry ice was a perishable supply used in practicing the patent.
APDC appealed to the Second Circuit, which reversed the judgment of the district court. The Second Circuit said that the doctrine of the Motion Picture Patents case did not apply, because the tied product (the dry ice) was a claimed element of the patented combination. That made the case different from prior tie-in cases in which the tied product was an unpatented supply (such as ink or film) used together with the patented device. The Second Circuit said:
It is only unpatented materials which form no part of the patented machine which the Supreme Court held the purchaser of the machine may use at will. The solid carbon dioxide forms the most vital part of plaintiffs' patented package. Marchiony might legally use defendant's carbice in any way not covered by the patent in suit, but he could not manufacture the patented package without the plaintiffs' consent, a consent which they withheld, unless the vital ingredient of its manufacture was purchased from them. To extend the doctrine of the Motion Picture Case as defendant contends would completely destroy the monopoly of plaintiffs' patent.
Carbice then appealed to the Supreme Court.
Ruling of Supreme Court
Justice Brandeis wrote for a unanimous Court, reversing the Second Circuit and reinstating the judgment of the district court. After explaining the factual setting, the Court said: "Whether the transportation package described is a patentable invention we need not determine. For even if it is, no relief can be granted."
The Court cited Motion Picture Patents Co. v. Universal Film Mfg. Co. for the proposition that a patentee "may not exact as the condition of a license that unpatented materials used in connection with the invention shall be purchased only from the licensor, and if it does so, relief against one who supplies such unpatented materials will be denied. The limited monopoly to make, use, and vend an article may not be 'expanded by limitations as to materials and supplies necessary to the operation of it.' " The Court added, "The relief here sought is indistinguishable from that denied in the Motion Picture Case."