Part 16

The receiving of a new member constitutes a new partnership. It may reorganize the old partnership and become responsible for its debts, or it may not. Unless recognized in some way by paying interest on them and the like, the new member does not become responsible for them.

A partnership is formed usually by a definite agreement that is put in writing. Yet it may be simply an oral agreement with very general terms about the contribution of capital or skill of the respective partners and their division of profits. They may and usually do have distinct fields of employment, each doing the thing for which he is, or supposed to be, best prepared. By reason of their general liability, in the olden days persons who wished to thus engage and yet not be responsible, were kept in the background, and were known as secret and dormant partners. If found out they were liable because they were to share in the profits. The fact that they were unknown when credit was given to the partnership at the time of selling goods to the concern did not shield them from liability after the discovery of their relation.

The difficulty has since been removed in two ways, by incorporating the partners into a corporation whose powers and liabilities are fixed by law and therefore known to all, and by forming limited liability partnerships. These consist of two or more general partners, also special partners who contribute an amount of capital, of which the public is publicly informed. If such an association is unsuccessful, the special partners may indeed lose all, or a part of the capital they have contributed, but are liable for no more. This is a great improvement over the secret and dormant methods of getting the capital needed for partnership purposes. One of the matters that should be carefully guarded in forming a limited liability partnership is to contribute the full amount of capital advertised. If any deception is practiced, or mistake made, whereby a smaller amount is contributed, should the partnership not succeed, the special partners become liable as general partners for the full amount. Once such a partnership was formed with three special partners who contributed each $100,000, and at the end of two years were told that their profits individually were $60,000. Each was asked to contribute $100,000 more, and feeling happy over his venture, he put in $40,000 more, which, added to his profits, made up the required amount. When the concern failed a few years afterwards the books showed that neither special partner was ever entitled to $60,000 as profits. Though innocent, for they had never examined the books, they were held as general partners for the entire indebtedness of the concern.

An illegal contract made by a partner will not bind his partnership, for all parties are supposed to know the law, and an illegal bargain cannot be enforced, for example, an agreement to pay usurious interest.

How may a partnership be dissolved? Unless the time is fixed by agreement, it may be dissolved by any member whenever he pleases to do so, though he cannot act wantonly to the manifest injury of the others without making himself responsible for their loss. And if a partner should attempt to transfer his interest before the time fixed for ending the relation without good reason, to the manifest injury of the other partners, he can be legally restrained from taking such action.

The death of a partner causes a dissolution. Nor can executors or administrators succeed to his place, though they often do so for a short period to prevent the interruption of the business and to enable all parties to fare better than they would by its sudden ending. Yet it is awkward for these officials to thus act, and in so doing they incur an unpleasant personal responsibility. To relieve them from this some states have passed statutes permitting them to thus act with the other partners under the direction and orders of the court having charge of the estate.

A partner who retires should give notice of his retirement to relieve himself from future liability. For, should he neglect, and persons continued to sell on credit to the firm, supposing he was a member, he would be liable as before. The statutes in some states regulate his duty in this regard; it is one that he cannot safely omit.

Should a partnership fail, the general rule with respect to the assets is the partnership property must be used to pay partnership debts, and the individual property of partners to pay their individual debts. If a partner has anything left after paying his individual debts, it must be devoted to paying the partnership debts. If the partnership has anything left after paying its debts, this belongs to the partners in accordance with their agreement in contributing it and the earnings, and must be devoted to the payment of their individual debts.

Lastly concerning the authority of a liquidating partner. He can do many things, give renewal notes, make indorsements, collect debts due the partnership, and even revive an outlawed debt. Of course the affairs of a partnership may be settled by some other person than a partner; not infrequently a receiver is appointed who acts under the order of the court that appointed him.

An agreement between a liquidating partner and the other partners, to take all the property and pay all the debts, is limited in its effect to themselves and does not affect others. After the partnership assets have been transferred to a liquidating partner, or to any other person for liquidation, a debtor who has notice of the transfer is not justified in making a settlement with any one else. And if he should do so, the liquidator could require him to pay again to himself.

=Patent.=--In the United States the thing patentable is a new and useful art, machine, manufacture or composition of matter, or new and useful improvement thereof, or new, original and ornamental design for an article of manufacture. An idea, principle or law of nature is not patentable, but only the means for utilizing the idea or principle. Many a great discovery has slipped away from the inventor or discoverer, because he sought to hold the discovery or invention of the principle as his own, instead of limiting his claim to the means or methods of putting his principle into use. Morse's invention of telegraphy is one of them. An art or process is patentable as well as machinery, though the inventor may not know the abstract principles involved in his art. But he must know and describe the steps by which the result is accomplished. A composition of matter is a mechanical mixture or chemical combination of two or more substances; and an improvement is an addition to, or change in, a known art, machine, manufacture or composition of matter, which produces a useful result and is patentable if it amounts to invention. Lastly "a patentable design may consist of a new and ornamental shape given to an article of manufacture, or of an ornamentation to be placed upon an article of old shape." It is said that the law relating to this subject intends that the patentability of a design shall be determined by its appeal to the eyes of the ordinary man, and not to the eyes of a jury of artists. Design patents are granted for different periods, three years and a half, seven years and fourteen years, as the applicant may elect.

The subject matter of a patent must be new and useful. It must be new not only to the patentee, but to all the people in this country, and at the time he filed his invention. The federal law, however, secures a patentee who had no knowledge that his invention had been discovered abroad and which had not been patented there, nor described in a printed publication. Before the enactment of this law a patent was not granted without showing that the applicant was the original inventor with relation to every part of the world.

Much has been said concerning the novelty of an invention. This may be in the use of an old means in a new way; or a change of shape or form to produce new functions and results, but the changes must amount to invention, which is more than mere novelty.

A foreign patent in order to invalidate an American patent must antedate the invention patented. A foreign patent exists as a patent only as of the date when the invention was published. In England an invention is not patented within the meaning of the act of Congress until the enrollment of the complete specification.

What is meant by a prior publication? It is a printed book, newspaper or document of a public nature disclosing the invention intended and actually employed for the purpose of informing the public. Publication in a book of general circulation is sufficient; business catalogues or circulars are not such publications as are meant in the law.

To defeat a patent on the ground of want of novelty the proof of prior use or knowledge must be convincing, sufficient to establish the fact beyond a reasonable doubt. The recollection of one witness concerning the peculiar construction of a piece of machinery, especially if the structure is one of complex character, is not enough evidence to defeat a patent. Much less evidence, however, might be sufficient to prove that a very simple invention had been anticipated.

To justify the granting of a patent it must be useful. If the invention be frivolous or pernicious, the inventor cannot secure for it legal protection. The use of the invention must not be contrary to public health or morals. It is not needful that the invention should be the best of its kind, or that it should accomplish all that the inventor claims for it. Furthermore, its utility depends on the state of the art at the time of making the claim or issuing the patent; its subsequent inutility does not invalidate the patent. Extensive use is evidence of utility. The presumption of law favors a patent, and the burden of proof is on the one attacking it to show that it is not useful. The infringement of an invention is in effect an admission of utility, because use implies utility.

A patent also calls for the exercise of inventive power. Though invention must be seen in every patent, it is difficult to define. Says a former commissioner of patents, Justice Duell: "It is a matter resting in judgment and therefore no fixed rule for its determination is possible." Some principles, however, assist in defining the term. "Thus, it is declared that an act of invention is primarily mental and involves the conception or mental construction of a means not previously known for accomplishing a useful result. It is not the mere adaptation of old means by common reasoning, but is the construction of new means through an exercise of the creative faculties of the mind." Between invention and discovery the patent laws draw no distinction. Again, it has been often said that the design of the patent laws is to reward those who make a substantial invention or discovery, which is an additional step in the useful arts. The law never intended to grant a monopoly for every trifling device which would naturally occur to a skilled mechanic in the ordinary progress of manufacture.

An article of manufacture is not patentable because means have been devised to make it more perfectly than before; it must be new in itself and not merely in its workmanship. A machine-made article therefore is not patentable simply because it is thus made, and no longer by hand.

The substitution of an art, manufacture, or composition of matter of one element or device for another which does the same thing in the same way and accomplishes a similar result is not invention. Even if the substituted part performs the function better, there is no patentable invention unless some new function or result is secured. Changes therefore of the relative location of parts without changing the functions performed by them are not an invention, nor is the omission of a part with a corresponding omission of function.

A patent can issue only to the inventor, or if he is dead to his executor or administrator. If there be two original inventors the one who first made it or brought it to this country is entitled to a patent. A patent granted on the application of a non-inventor is void. By first inventor is meant the one who first had a mental conception of the invention provided he exercised diligence in perfecting it. If there be a rival claimant the party who first reduced to practice the invention was, until the contrary fact is shown, the first inventor. One who merely utilizes the ideas of others is not an original inventor and is not entitled to a patent. In the United States any person, regardless of residence, citizenship or age may obtain a patent.

An invention is reduced to practice when it is so far perfected that it may be put into practical and successful use. The machine may not be perfectly constructed, but it embodies all the essential elements of the invention. Demonstration of its success by actual use is usually necessary, but not always. The reduction to practice must be by the applicant for a patent, or by his agent; to do this by a third party will not suffice. The person who first conceived the invention, but was later than his rival in reducing it to practice, is not regarded as the first inventor unless he exercised due diligence to perfect his invention after the time that his rival entered the field against him.

Two or more parties may contribute in developing an idea and producing an invention, which is truly the result of their joint mental efforts, and not the separate invention of either. In such case both must apply for the patent, which is granted to them jointly. But if a patent is thus issued to two and only one of them is the inventor, the patent is invalid. Nor can one of two joint inventors make application and secure the patent on assignment from the other; both must join.

The patent must issue on the application of and in the name of the real inventor even though he was employed to make it for the benefit of another. Notwithstanding, the employer is the owner of the patent and may compel the patentee to transfer it to him. Of course their respective rights may be changed by agreement. If no agreement exists, a company that employs a skilled workman to make improvements on its machinery is not entitled to the patents granted to the workman. Says Justice Duell: "An employee, performing all the duties assigned to him in his department of service, may exercise his inventive faculties in any direction he chooses with the assurance that whatever invention he may thus conceive and perfect is his individual property. The company, however, has an implied license to make, use and sell the invention."

Where a party employs another to assist him in perfecting an invention the presumption is that the employer is the real inventor of the thing produced by their joint effort. On the other hand, where a person is employed to exercise his inventive skill, because he is known to be the possessor of it, Edison for example, the presumption is in favor of the employee. Government employees may secure patents on inventions made by them during their employment, after their relationship has ceased. The government may have an implied license to use the invention without any title thereto.

Patents may be issued and reissued to assignees on the application of inventors. On the death of an inventor before a patent has been issued to him, his executor or administrator may apply therefor, who takes the patent in trust for the heirs. A foreign executor or administrator may make a similar application. He must, however, present a proper certificate of his authority to act. Likewise, a legally appointed guardian or conservator of an insane inventor may apply for and obtain a patent in trust for him.

The inventor must apply to the commissioner of patents for letters patent which secure to him his invention. The application comprises a petition, specification, claims, oath, drawings if the nature of the invention may be thus shown, and a model, when this is required by the patent office. A fee of fifteen dollars also must be sent with the papers. The application must be signed by the inventor and two witnesses.

The specification is the written description of the invention and of the manner and process of making, constructing, compounding, and using the invention; whatever it may be. He must describe not merely the principle of the invention, but the mode of applying it in such a clear, intelligible manner that those who are "skilled in the art" can, without other aid, use the invention. Nothing should be left to experiment. The phrase "skilled in the art" means persons of ordinary skill. Whether a description is clear, exact and sufficient is a question for the jury whenever it is a matter of legal contention.

In describing an improvement the same rule is applied. The description should show clearly the nature of it. The description should distinguish between the old and the new. "A description in a patent for an improvement is sufficient if a practical mechanic acquainted with the construction of the old machine in which the improvement is made, can, with the aid of the patent and diagram, adopt the improvement." If an inventor intentionally conceals facts or misleads the public by an erroneous description, his patent is void.

Concerning the claim or claims with which the inventor concludes his specification many questions have arisen. First, the claim must be clearly stated so that the public may know what it is. The claim should not be too broad. Several claims may be made, but they should not be varying phraseology for the same thing. They should state the physical structure or elements of mechanism by which the end or result is produced.

The inventor must make oath that he believes himself to be the original and first inventor, that he does not believe that the thing was ever before known or used, and as to his citizenship. If dead or insane, the oath must be made by his executor, administrator, or other representative. After the application is granted another fee of twenty dollars must be paid.

The commissioner of patents must make an examination for the purpose of deciding whether a patent may be granted or allowed. This examination is made by an examiner, whose decision, however, is not conclusive and may be set aside by the commissioner. The patent office is not confined to technical evidence in rejecting applications, but may base its action on anything disclosing the facts relating to the matter.

When objection is made to the form of the application, an amendment may be made by the applicant or his attorney to correct the error; and this may be done at any time prior to the entry by the first examiner of a final order of rejection, and within one year from the date of the preceding action by the patent office.

When two parties apply for a patent for substantially the same thing an interference is declared and the respective parties must present proofs in support of their claims. The question between them is priority of invention. The proceeding then is much like an equity trial with perhaps a wider latitude in admitting evidence bearing on the inquiry.

The applicant, if dissatisfied with the rejection of his claim by the first examiner, or with the decision in an interference case, can appeal to the board of the examiners-in-chief, and if dissatisfied with their decision he may appeal to the commissioner in person, and if still dissatisfied he can appeal to the Court of Appeals of the District of Columbia. All appeals must be taken from the patent office within a year, or a shorter period, if one has been fixed in a decision.

The decision of the commissioner of patents in granting a patent is not conclusive that the inventor is the first and original inventor, but only prima facie, that is, in the absence of other evidence to the contrary. Consequently, the question of patentability in every case may be reexamined in the courts. In the early days of administering the patent law an inventor often applied to a court for an injunction to prevent an infringer from continuing his work. The court, assuming that the patent had been properly granted, did not hesitate, on adequate proof of the infringement to grant the injunction. The courts were not slow in finding out that patents were sometimes granted that ought not to have been, and so the practice was changed and patentees were required to establish their right to a patent in a court of law before a court would enjoin an infringer, except in very clear cases. These hearings in the courts to decide the claims of patentees, are often prolonged, running through years to collect testimony, and are appealed from one court to another finally reaching the supreme federal tribunal. After a patent is thus judicially established injunctions are readily granted against all infringers.

=Payment.=--In making payment the parties to an agreement always have in mind cash, unless they otherwise agree. Not every kind of money can be used, nor only in limited amounts. Thus, if one owed another a thousand dollars he could not deliver to him, unless he were willing to accept them, one thousand silver dollar pieces, but only ten of them. Nor can a debtor compel his creditor to receive one cent and five cent pieces to a greater amount than twenty-five cents. National bank notes may be paid or tendered to the government, and by one bank to another, yet they may be refused by an individual in payment of his debt. It is important, when one owes another and there is a dispute over the amount, that the debtor should tender or offer to pay his creditor the proper kind of money, because should he offer him some other kind, national bank notes for example instead of United States notes, or those issued by the federal reserve bank, and he declined to take them and should afterwards sue his debtor for the amount, the latter's offer to pay in national bank notes would be regarded as no payment, or even offer of payment.

A note or check given for a bill of goods is not payment. In everyday affairs a check is thus given and received, in fact it is only a payment conditioned on payment of the check. Consequently if it is not paid, the creditor can sue to recover on the check, or for the original goods as he might elect. In most cases he would ignore the check and sue for the original bill. Suppose some one had endorsed the maker's check, then the creditor would probably sue on that in order to hold both parties.

Does a debtor who turns over a note to his creditor in payment, thereby cancel the debt? If he does not, of course the creditor can still sue the debtor; but if he turned the note over in actual payment, then his right to sue his debtor is gone. What was the intention of the two parties? This is a question of fact to be ascertained like any other.

How shall the money be applied of one who owes several debts to the same person and makes a general payment? The debtor can make the application, if he does not, the creditor can do so; if neither does this, then the law applies it, first to the payment of interest that may be due on any of the debts, and the balance left, should there be any, to the payment of the principal. Of several debts the law applies it to the oldest debt. Again, if there is a surety for any of the debts, he may insist on the application of the money in order to be relieved.