Bauer & Cie. v. O'Donnell 229 US 1 1913 was a court case involving licensing terms on patented works.
Argued 10 April 1913. Decided 26 May 1913.
Baur & Cie sold Sanatogen, a patented water soluble albumenoid, with this notice on each bag;
- "Notice to the Retailer. This size package of Sanatogen is licensed by us for sale and use at a price not less than one dollar ($1). Any sale in violation of this condition, or use when so sold, will constitute an infringement of our patent No. 601,995, under which Sanatogen is manufactured, and all persons so selling or using packages or contents will be liable to injunction and damages.
- A purchase is an acceptance of this condition. All [229 U.S. 1, 9] rights revert to the undersigned in the event of violation.'"
They however found that;
- It is contended in argument that the notice in this case deals with the use of the invention, because the notice states that the package is licensed 'for sale and use at a price not less than $1,' that a purchase is an acceptance of the conditions, and that all rights revert to the patentee in event of violation of the restriction... it is a perversion of terms to call the transaction in any sense a license to use the invention. The jobber from whom the appellee purchased had previously bought, at a price which must be deemed to have been satisfactory, the packages of Sanatogen afterwards sold to the appellee. The patentee had no interest in the proceeds of the subsequent sales, no right to any royalty thereon, or to participation in the profits thereof. The packages were sold with as full and complete title as any article could have when sold in the open market, excepting only the attempt to limit the sale or use when sold for not less than $1. In other words, the title transferred was full and complete, with an attempt to reserve the right to fix the price at which subsequent sales could be made... to call the sale a license to use is a mere play upon words."