Opinion
The patents involved in this case were held valid and infringed in the findings and opinion published in 77 Ct.Cl. 87. The question now for determination is the amount of reasonable and entire compensation under the Act of June 25, 1910, 36 Stat. 851, as amended by the Act of July 1, 1918, 40 Stat. 704, 35 U.S.C.A. § 68, for the use by the defendant without the consent of plaintiffs of the patented inventions at the Wireless Telegraph Station at Tuckerton, N.J., which was controlled and operated by the defendant during the period September 9, 1914, to April 6, 1917.
Special Findings of Fact.
1. This is a patent suit filed to recover the reasonable and entire compensation for the unauthorized use by the United States at the Tuckerton, New Jersey, trans-Atlantic Wireless Station of inventions covered by certain United States patents issued to Reginald A. Fessenden.
The court in its special findings of fact and opinion of March 13, 1933 (77 Ct.Cl. 87), held that Fessenden patient 1,050,441 was valid and infringed as to claims l1-4, inclusive, 6, 9, 22-25, inclusive, and 29, and that Fessenden patient 1,050,728 was valid and infringed as to claims 1 and 2. These patents are known as the "heterodyne" patents.
2. The accounting period in this case is from September 9, 1914, when the United States took control of the Tuckerton Station and commenced commercial operation of it, to April 6, 1917, when the United States declared war on Germany, after which the station was sued by the United States exclusively for military purposes.
The two Fessenden patents which form the basis of this accounting relate respectively to apparatus for (patient 1,050,441) and a method of (patient 1,050,728) radio communication. 3. In so far as the present accounting is concerned, it lis limited to radio telegraphy in which letters and symbols are represented by certain groupings of dots and dashes produced at the transmitting station by a telegraph key which is closed for a relatively short interval to form a dot and for a longer interval to form a dash. These signals are conveyed from the receiving apparatus to the ear of the operator at the receiving station by means of a telephone receiver, or equivalent device, as sounds of short or long duration, and as the message is received the receiving operator re-transcribes these sounds into the original letters and symbols.
The pitch or frequency of the sound produced in the telephone receivers at the receiving station must be within the perception range of the human ear or, to use radio terminology, must be of "audio-frequency". By way of example, a tone having a frequency of 500 cycles per second produces a well-defined musical note.
4. In the transmission of energy from the transmitting antenna to the receiving antenna it is necessary to utilize alternating currents of extremely high frequency, these sometimes being in the nature of one million cycles per second. These high frequency or "radio-frequency" currents are produced by a suitable generating means at the transmitting station and caused to flow in the antenna circuit. Energy is radiated from that antenna at a wave-length determined by this "radio-frequency," some of this energy being picked up by the receiving antenna which is tuned to respond to that particular radio-frequency.
The energy flowing in the transmitting antenna may be broken up into period of short or long duration by means of a telegraph key, but as this radio-frequency is far above the range of audibility it is necessary to modulate the radio-frequency energy at an audio-frequency either at the transmitting station or at the receiving station in order to transmit intelligence.
One of the features of the heterodyne patents in suit relates to the production of an audio-frequency at the receiving station.
5. Two systems were available for use at the beginning of the accounting period in which the audio-frequency modulation was performed in the receiving system. They were as follows:
(a) The tikker. One conventional form of tikker was a rotating brass wheel having a fine steel wire making a light contact in a groove on the periphery of the wheel. The slight irregularities in the surface of the wheel caused the circuit to open and close at more or less irregular intervals. When the circuit was open a condenser in the receiving circuit became charged and when the circuit was closed the condenser discharged. These irregular discharges passed through the telephone head set, each one causing a click. The speed of the rotating disc was such that the clicks followed each other so closely that they resulted in a sound in the telephone head set best described as being "hissing" or "mushy" in character. The sound produced was of this character rather than that of a musical tone because of minute irregularities on the periphery of the wheel, which in turn caused the condenser to charge and discharge in an irregular manner. (b) The tone wheel. In the method of tone wheel reception the basic element also comprised a motor-driven rotating member. In this case the member was a rotating wheel having a relatively large number of conducting teeth or contact segments on its periphery. Each contact segment was separated from the preceding segment on the periphery by an insulating segment of exactly the same peripheral width. A stationary contact brush was mounted to press against the periphery of the wheel so that, as the same rotated, the electrical circuit thus formed was alternately opened and closed, the duration of the open period being exactly the same as the closed period.
The tone wheel was driven by an electric motor, the speed of which could be readily adjusted by means of a control knob. The rotational speed of the disc and the number of contact segments on its periphery were so selected that the interruptions produced had substantially the same frequency as the received high-frequency energy. The received continuous wave current was passed through the brush and tone wheel contacts to the head telephones. If by means of the speed-adjusting knob a speed was selected at which the frequency of interruptions by the tone wheel were exactly in step with the cycle of the high-frequency current, no sound would be heard in the telephones, the resultant interruptions of the current by the tone wheel occurring at a fixed relationship with the cycle of the incoming high-frequency and being above audio-frequency.
If, however, the speed of the tone wheel was adjusted so that it was either slightly faster or slower than the synchronous speed, the interruptions of the tone wheel either gradually overtook or lagged behind the individual cycles of the high-frequency current, thereby causing a relatively slow periodical change (at audio-frequency) in the current flowing to the telephones whenever the transmitting key was depressed. The operation of the tone wheel thus introduced an audio-frequency component into the received currents, the pitch of which was dependent upon the extent to which the tone wheel is out of synchronism.
A crude mental picture of the operation of the tone wheel may be had by visualing as the received high-frequency energy a freight train traveling at 60 miles an hour and made up of alternate box cars and flat cars of the same length. If the tone wheel be now visualized as a second similar freight train with alternate box cars and flat cars traveling on a parallel track, it will be evident that if both trains travel in the same direction at exactly 60 miles an hour there will be no relative movement and no relative effect between the two trains traveling side by side.
The tone wheel possessed the following advantages:
(1) The range of audible tone frequency was relatively narrow, so that it was possible to select the particular station whose signal it was desired to receive to the exclusion of other stations transmitting at the same time.
(2) The sound received by the telephones was in the nature of a musical tone, the pitch of which could be varied by the receiving operator by adjustment of the control knob of the driving motor. The operator was therefore able to select any desired musical note or pitch that gave to his ear a maximum audibility and which he could distinguish from other signals of different pitch or from the irregular noises produced by static.
6. The tone wheel possessed one disadvantage in common with the tikker. In each of these devices the received energy, which was minute in character, had to flow through a brush bearing on the periphery of a rotating member. The contact between the brush and the rotating member was delicate in character and could easily get out of adjustment.
A second disadvantage arising from the use of the tone wheel was that the receiving circuit was interrupted or opened one-half of the time, and therefore one-half of the received energy was lost, although this did not of necessity mean a corresponding loss in signal strength heard in the telephones.
A third disadvantage in the use of the tone wheel existed in the fact that the pitch of the audio-frequency tone was dependent upon the maintenance of an absolutely steady speed of the driving motor, and any variation in this speed would cause a change in the pitch of the tone or, if the variation were great enough, an entire loss of the signal.
7. Both of the Fessenden patents, upon which the present accounting is predicated, eventuated from the same original patent application and both patents disclose the same apparatus and construction. Patent 1,050,441 carries the claims directed to structure and patent 1,050,728 has claims directed to a method.
Both of these patents relate to the reception of signals by means of continuous high-frequency energy impressed upon the antenna at a receiving station. As stated in patent 1,050,728: "The primary object of my invention is to eliminate interference and increase the intensity of signals, by operating the indicator at the receiving station by the conjoint energy of the received electric impulses, and certain cooperating currents produced locally at the receiving station. This application furthermore contemplates the production of signals by means of harmonic beats produced between the currents of the received electric pulses and the locally produced cooperating electric pulses, the indicator being moved by the energy of the combined currents and therefore being under control, as to the frequency of motion, by the receiving operator."
One of the objects indicated by the patent specifications is the production of an audio-frequency modulation at the receiving station.
The essential feature of both patents is that there is located at the receiving station a local source of continuous high-frequency oscillations, the frequency of which is controllable by the receiving operator. When high-frequency energy is received by the receiving antenna and the receiving circuits of the receiver, the high-frequency oscillations from the local source are also impressed upon the receiving circuit, and these local oscillations are so adjusted by the receiving operator as to differ slightly from the received oscillations from the transmitting station.
These two sets of oscillations interact to produce a beat note or tone, the resultant frequency of which is the difference in frequency between the oscillations received from the distant transmitting station and the oscillations produced by the local oscillating system at the receiving station, a proper selection of the local oscillations thereby resulting in producing a tone or signal of audio-frequency.
8. In the particular embodiment selected for illustration in the patents in suit the local high-frequency alternator driven by an electric motor, the speed of which is controlled by means of a speed-adjusting knob or rheostat. If by this means a speed was selected at which the frequency of the local oscillations were exactly in step with the oscillations of the high-frequency current in the receiving antenna, no sound would be heard in the telephone. If, however, the speed of the local high-frequency generator was adjusted so that it was either slightly faster or slower, and the local oscillations were no longer synchronous with the received oscillations, the peaks of the local oscillations either gradually overtook or lagged behind the individual peaks of the received high-frequency current, thereby causing a relatively slow interacting periodical change (at audio-frequency) in the impulses acting upon the telephone diaphragm. A musical tone was thus produced in the telephone, the pitch of which was under the control of the receiving operator.
9. The patents are not limited to the particular embodiment referred to in the previous finding.
On pages 1 and 2 of patent 1,050,728, it is stated:
"As a frequency controlling device, it is preferred to use a high frequency alternator, or any other suitable device for producing unintermittent oscillations, * * *.
"While a variety of forms of receiving devices may be employed, the construction shown in Fig. 3 is convenient and desirable."
In patent 1,050,441 it is suggested that a mercury lamp producing oscillations, or any other suitable source for producing unintermittent oscillations, may be used.
10. Claims 1, 2, 3, 4, 6, 9, 22-26, inclusive, and 29 of the structure patent 1,050,441 are valid and have been infringed by defendant during the accounting period. Claims 25 and 29 may be taken as typical and are as follows:
"25. In wireless telegraph apparatus for transmitting energy, the combination of a transmitting station having apparatus for sending practically continuous high frequency oscillations, a receiving station, a receiver at the receiving station and a source of practically continuous high frequency oscillations operatively connected to the said receiver, substantially as described."
"29. Electric signaling apparatus comprising a receiving station having an absorbing circuit, an indicator, a local generator of alternating current of frequency different from that of the received current, and means to operate said indicator by beats produced thereby in conjunction with the received current."
11. Claims 1 and 2 of the method patent 1,050,728 are valid and have been infringed by defendant during the accounting period. These claims are as follows:
"1. In the art of electric signaling, the method which consists in moving an indicator at the receiving station by the interaction of the received impulses forming the signal, and a series of sustained electric impulses locally produced at the receiving station and maintained with a frequency near to but not the same as the frequency of the received impulses.
"2. In the art of signaling, the method which consists in making an indication by the interaction of received impulses of sustained frequency and amplitude with impulses of neighboring frequency generated by a constantly acting local source of energy at the receiving station."
12. Some of the advantages possessed by the heterodyne system of reception as predicted upon the patents in suit are summarized as follows:
(a) A narrow range of audible tone frequency contributed to the ability to select a particular station whose signal it was desired to receive to the exclusion of other stations transmitting at the same time. (b) The exclusion of static noises and extraneous stations transmitting near the same wave length due to the ability of the operator to select any desired musical pitch that gave to his ear a maximum audibility. (c) The combination of the locally generated energy at the receiving station with the received signal energy produced a selective amplification of the signal, or an increase of audibility which resulted in an increased range of reception of signals over the prior art systems with the utilization of the same amount of energy at the transmitting station.
The advantages set forth in (a) and (b) resemble the advantages present in reception by the tone wheel (see Finding l5), with the distinction that the Fessenden heterodyne system obviated the use of any delicate rotating contacts or loss of energy by a periodic interruption of the current and was more rugged and simple in character.
The term "selective amplification" was used in advantage (c) refers to an amplification effect dealing only with the desired selected or heterodyned signal in contra-distinction to amplification or amplifiers used in radio reception in which the desired signal and the extraneous background noises are both amplified.
13. The practical effect resulting from the use of the Fessenden heterodyne system was the creation of a more selective, sensitive, and rugged receiver by means of which signals could be received from a transmitting station of given power over an increased distance as compared with the prior art receivers. Messages could be received under conditions of static and interference where the prior art receivers would not operate to receive intelligible signals.
The heterodyne patents in suit were basic or pioneer in character and the inventions covered therein have been of great value in the radio art.
14. In the early part of 1913 or shortly prior thereto a German company, Hoch-Frequenz Maschinen Aktiengesellschaft fur Drahtlose Telegraphie (hereinafter referred to as "Homag"), began construction of a pair of trans-Atlantic radio telegraph stations. One station was located at Tuckerton, New Jersey, and the corresponding German station at Eilvese, Germany. As constructed, each station comprised a continuous wave transmitter and a receiver of the tone wheel type.
By July 1913 the transmitter at Eilvese had been completed and signals were sent and received by the tone wheel receiver at Tuckerton, New Jersey.
Installation of the transmitter at the Tuckerton Station was completed in the spring of 1914, and the Tuckerton Station began to transmit messages in April or May of that year.
15. In June of 1914 tests were made of two-way wireless telegraph communication between Tuckerton and its corresponding German station at Eilvese. The Tuckerton Station was then shut down in preparation for an enlargement of the station, including an additional powerhouse, an electric power line from Atlantic City as reserve power, and an additional receiving station located sufficiently distant from the transmitting station at Tuckerton to permit simultaneous reception and transmission of signals.
16. The day after the outbreak of the European war (August 4, 1914) cable communication between the United States and Germany was terminated by cutting the cables, and the Tuckerton Station started the next day in an attempt to transmit and receive messages to and from Eilvese on a commercial basis.
From August 6 to September 9, 1914, the station both transmitted and received commercial messages, with an increase in the volume of traffic throughout this period.
17. On September 9, 1914, the Tuckerton Station was seized by the Secretary of the Navy under Executive Order No. 2042, dated September 5, 1914, the purpose and intent of this order being expressed by the following quotation therefrom:
"Whereas an order has been issued by me dated August 5, 1914, declaring that all radio stations within the jurisdiction of the United States of America were prohibited from transmitting or receiving for delivery messages of an unneutral nature and from in any way rendering to any one of the belligerents any unneutral service; and "Whereas it is desirable to take precautions to insure the enforcement of said order insofar as it relates to the transmission of code and cipher messages by high-powered stations capable of trans-Atlantic communication * * * "
The Secretary of the Navy upon taking control of the Tuckerton Station immediately replaced the German operators at Tuckerton with Navy personnel, and thereafter, throughout the accounting period, the management, control, and operation of the station were exclusively and entirely under the control of the Secretary of the Navy
In a few weeks after taking over the station the Navy personnel discarded the tone wheel receiver previously installed at the Tuckerton Station and installed one or more receivers embodying the use of audion tubes, a three-stage audio-frequency amplifier, and the heterodyne system and method of receiving continuous wave signals as covered by the patents in suit. The heterodyne method was utilized in the operation of the station from the time of its installation until April 6, 1917. On this latter date, which terminates the accounting period, the United States declared war on Germany and commercial operation of the Tuckerton Station ceased.
18. The use of the heterodyne method of reception at Tuckerton as covered by the patents in suit was an improvement over the tone wheel and facilitated the reception of messages from the Eilvese station.
It only indirectly affected the transmission of messages from Tuckerton to Eillvese, in that the traffic capacity of a transmitter is dependent upon the ability to get confirmation of the receipt or nonreceipt of a complete message which is transmitted, and to check and correct errors.
19. During the period of commercial operation under the supervision of the Navy Department, the Tuckerton Station received from Eilvese 876,788 paid words and transmitted to Eilvese 1,l270,471 paid words.
The international custom of the 1914-1917 period was for corresponding wireless telegraph stations to charge equal rates in both directions. This was substantially the arrangement between the Tuckerton and Eilvese stations. The toll rate charged for commercial messages sent from Tuckerton to Germany during the accounting period was 50 cents per paid word, which included the cost of local wire telegraph delivery to the addressee.
20. The gross tolls collected by the Navy in connection with the Commercial operation of the Tuckerton Station during the accounting period were as much as $600,321.42. From this gross amount direct expenses of maintenance paid by Emil Mayer, as agent for Homage, and repaid to him by the Navy Department upon monthly certificates submitted by Mayer, amounted to $137,036.52.
On October 19, 1915, the Secretary of the Navy paid to the owners of Eilvese, the corresponding station with which Tuckerton carried on a commercial toll radio telegraph communication service, the sum of $35,237.61. And on June 10, 1919, the Secretary of the Navy paid $28,560.15 to the Alien Property Custodian, as Trustee for Homag, as a share of the tolls collected lat Tuckerton by the Navy and due the German station, leaving net tolls amounting to $399,487.14 after all payments. This latter amount was paid by the Navy Department to attorneys for a French corporation, Compagnie Universelle de Telegraphie et de Telephonie Sans Fil, for whom Homag had contracted to construct the Eilvese land Tuckertone stations.
21. Substantially all of the amount of approximately $600,321.42, which was collected as gross tolls by the Navy Department in the United States, originated in the transmission of 1,270,471 paid words from Tuckerton to Eilvese at 50 cents per word.
There is no evidence as to any amounts actually collected in the United States for messages transmitted from Eilvese and received at Tuckerton.
22. Two forms of continuous wave transmitters were used at Tuckerton during the accounting period to transmit to Eilvese.
The patents in suit disclose nothing novel and expressed no monopoly with respect to the production of or emanation of continuous waves from a transmitting station. They do not relate to either the construction or method of operation of a continuous wave transmitting station.
The patents in suit relate to and cover the heterodyne beat note method of reception and apparatus therefor, whereby a radio receiver is rendered more sensitive and can receive a signal transmitted by continuous waves over greater distances with greater selectivity and reliability as compared to prior art receivers such as the tone wheel.
Just and reasonable compensation for the use of plaintiffs' inventions is properly based upon the receiving apparatus installed and used at the Tuckerton Station by the Navy Department during the accounting period.
23. There is no evidence as to the number of receiving sets used at Tuckerton during the accounting period.
In order to maintain a twenty-four hour reception a reasonable and careful traffic superintendent would maintain three receivers in service, each of which would be in use during a portion of the twenty-four hour period. He would also have available for cleaning, repair, and adjustment purposes three spare substitute receivers.
The cost of the six receivers would approximate $500 each, or a total of $3,000.
24. In the companion case, National Electric Signaling Co. v. U.S., C-26, Ct.Cl., 49 F.Supp. 754, involving the same plaintiffs and based on the same patents in suit, there are included in the accounting navy receivers contracted for as early as November 18, 1913. More specifically, this was the type I-P-76 receiver. This type of receiver was the most popular and best known receiver in the naval service and there were several hundred of these in service in the middle of 1914, when the ultra-audion and beat method of reception came into use. These receivers are set forth in the companion case in group "G" of the tabulations, Item 89.
25. Both prior to and during the accounting period plaintiffs refused to license others to manufacture or use apparatus under the patents in suit and refused to sell heterodyne apparatus that might to into commercial communication service, and there was no established royalty.
26. A fair and reasonable royalty for the use of the defendant's receiving sets for utilizing the inventions of the patents in suit is 18 percent of the cost of the sets where the receivers were used entirely for heterodyne reception. The receivers installed at Tuckerton were so used.
27. A reasonable and entire compensation for the use of the Fessenden inventions in suit is 18 percent of the sum of $3,000, or the sum of $540 plus an amount measured by interest at 5 percent per annum, not as interest but as a part of the entire or just compensation, on $540 from the beginning of the accounting period, September 9, 1914, to date of payment of the judgment.
28. Plaintiffs did not delay unreasonably in the circumstances in taking the proof in this and its companion case, No. C-26, which cases were tried together. Jo. Baily Brown, of Pittsburgh, Pa., for plaintiffs.
Clifton V. Edwards, of New York City, and Francis M. Shea, Asst. Atty. Gen. (J.F. Mothershead and T. Hayward Brown, both of Washington, D.C., on the brief), for defendant.
Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
LITTLETON, Judge.
The inventions covered by the patents in suit and used by the defendant during the accounting period from September 9, 1914, to April 6, 1917, while it controlled and operated the wireless telegraph station at Tuckerton, New Jersey, are explained and described in the findings herein, particularly findings 7 to 13, inclusive, and finding 10 of the findings and opinion promulgated March 13, 1933, 77 C.C. 87. The heterodyne patents in suit were basic or pioneer in character, and the inventions covered therein have been of great value in the radio art.
The parties differ widely as to the amount of reasonable and entire compensation which should be allowed for the use by the defendant during the accounting period of the heterodyne patents in suit. The defendant contends that a royalty of 10% of the cost of heterodyne receivers used, or a principal sum of $300, should be allowed. Plaintiffs ask for $90,721.41 plus a reasonable rate of interest as a part of the entire compensation to be allowed under the act of June 25, 1910, arrived at on the basis of 6 cents per paid word received by the wireless telegraph station at Tuckerton during the accounting period and 3 cents per paid word sent from that station. See findings 19-21. During the period of commercial operation under the supervision of the Navy Department of the United States, the Tuckerton Station received from Eilvese, Germany, 876,788 paid words and transmitted to Eilvese 1,l270,471 paid words. The toll rate charged for commercial messages sent from Tuckerton to Germany during the accounting period was fifty cents per paid word, which included the cost of local-wire telegraph delivery to the addressee. The international custom during the period 1914 to 1917 was for corresponding wireless telegraph stations to charge equal rates in both directions. The United States did not operate the Tuckerton Station for profit and the United States did not receive any of the income or profits derived from operation thereof. See finding 17 herein and finding 16 of the original findings of March 13, 1933, (77 Ct.Cl. 87). The expense of the Navy personnel in charge of control and operation of the station appears to have been borne by the United States without reimbursement, which expense amounted to about $40,000 a year.
Upon consideration of the entire evidence submitted by the parties, we are of opinion that the amount of compensation claimed by plaintiffs, and the basis thereof, cannot be allowed and that, in the circumstances, a proper measure of the reasonable and entire compensation to which the owner of the patents is entitled is a reasonable royalty based on the cost to the government of the radio receivers embodying the heterodyne inventions covered by the patents in suit. See finding 22.
In a companion case, National Electric Signaling Company, et al., v. U.S., C-26, Ct.Cl., 49 F.Supp. 754, decided this date, and relating to reasonable compensation for the same patents as are herein involved, we have found a reasonable royalty to be 18 percent of the cost of receivers when the same are exclusively used for heterodyne reception. Having established this measure of compensation, it is properly applicable to all of defendant's receivers thus used, and we accordingly find that a fair and reasonable royalty for the use by the defendant of a minimum of six receiving sets at the Tuckerton, New Jersey, station for utilizing the inventions of the patents in suit is 18 percent of the cost of the sets where the receivers were used entirely for heterodyne reception, as was the case at the Tuckerton Station. The cost of the six receivers was $500 each, or a total of $3,000. See findings 26 and 27.
Judgment will therefore be entered in favor of the International Devices Company for $540, together with an additional amount measured by a reasonable rate of interest at 5 percent per annum, not as interest but as a part of the entire or just compensation from September 9, 1914, until paid. It is so ordered.
WHALEY, Chief Justice, and MADDEN, Judge, concur.
JONES and WHITAKER, Judges, took no part in the decision of this case.
If, however, the speed of the second train (the tone wheel) is either increased or decreased, to 61 miles per hour or 59 miles per hour, there will be a relatively slow movement of one train with respect to the other at a speed of but one mile per hour, and at this relatively low speed the box cars in the second train will either gradually overtake or lag behind the box cars of the first train, so that the box cars of the second train will slowly pass the flat cars of the first train and gain come into step with the box cars of the first train.
If it be assumed that sunlight was shining across the two tracks the amount of light shining through the two trains will be a minimum when a box car is opposite a flat car and will slowly become a maximum when the box cars are in step with each other.