## Facts

- Western Electric and affiliated companies owned patents covering vacuum-tube amplifiers used in telephony and talking motion picture equipment.
- The patent owners licensed different entities by distinct fields of use, including exclusive rights in the talking motion picture theater field and nonexclusive rights in specified “private” radio reception fields.
- A nonexclusive licensee was authorized only to manufacture and sell amplifiers for private radio reception uses (broadcast reception, amateur reception, and experimental reception).
- Despite the restriction, the licensee manufactured amplifiers and sold them to General Talking Pictures Corp. for inclusion in talking picture equipment to be leased to theaters.
- The licensee and General Talking Pictures knew the license restrictions and intentionally disregarded notices affixed to the amplifiers describing those restrictions.
- Patent owners filed three infringement suits involving seven patents; the cases were tried together.

## Issues

1. Whether patent owners may impose field-of-use restrictions on a manufacturing license, so that manufacture and sale for an unlicensed field are outside the license and constitute infringement.
2. Whether patent exhaustion or “ordinary channels of trade” principles protect a purchaser who buys from a licensee while knowing the sale is outside the license scope.
3. Whether certain patents were invalid because the inventions were claimed in divisional/continuation applications after alleged prior public use.

## Decision

- The Supreme Court affirmed the judgment that six patents were valid and infringed.
- Field-of-use restrictions in the manufacturing license were valid under patent law.
- The licensee’s sales for theatrical talking picture use were unauthorized and therefore not sales “under the patent.”
- Because General Talking Pictures purchased with knowledge of the restriction, it was not protected as a purchaser in ordinary trade; both the licensee and the purchaser were infringers.
- The Court upheld the lower courts’ findings rejecting disqualifying public use before the relevant divisional application dates and sustained validity of the patents on that ground.
- The Court limited its review to the questions presented in the certiorari petition and declined to consider additional arguments raised only in briefing.

## Legal Principles

- A patentee may grant licenses limited to particular fields of use and reserve other fields for itself or other licensees.
- A licensee who manufactures or sells a patented article outside the license’s field-of-use scope acts without authority and commits patent infringement, not merely a contract breach.
- A purchaser who buys a patented article from a licensee with knowledge that the sale is outside the license scope is also liable for infringement.
- Patent exhaustion requires an authorized sale; an out-of-scope sale by a restricted licensee does not exhaust the patentee’s rights.
- On certiorari, Supreme Court review is confined to the questions stated in the petition; issues raised only in supporting briefs do not expand review.
- Inventions disclosed but not claimed in an earlier application may later be claimed in continuation/divisional filings, and validity turns on whether statutory bars (including prior public use) are proven.

## Conclusion

The Court held that field-of-use limits in patent licenses are enforceable: sales by a restricted licensee outside its authorized field are unauthorized and infringing, and a knowing purchaser takes no protection from exhaustion principles; it also sustained patent validity against a public-use challenge and confined review to the petition’s stated questions.


Gen. Talking Pictures Corp. v. W. Elec. Co., 304 U.S. 175 (1938)