Bauer & Cie. v. O'Donnell

Bauer & Cie. v. O'Donnell, 229 U.S. 1 (1913), was a 1913 United States Supreme Court decision involving whether a purchaser of a patented product bearing a price-fixing notice incurs guilt of patent infringement by reselling the product at a price lower than that which the notice commands. A divided Court (5–4) held that it was not.

Bauer & Cie, a German company, was the assignee of U.S. Patent No. 601,995, covering Sanatogen, a water-soluble drug product (patent medicine), advertised as the "King of Tonics" and a strength-giving "concentrated scientific food." Bauer sold the patented product in the United States through its exclusive sales agent, Hehmeyer, under a license agreement. Sanatogen was sold 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 ($1.00). 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 rights revert to the undersigned in the event of violation.

O'Donnell, a retail druggist in Washington, DC, purchased Sanatogen at wholesale and resold the Sanatogen for less than $1. He persisted in doing this and was cut off, but he managed to continue to purchase the product from jobbers in DC "and avers that he will continue such sales." This led to the present patent infringement suit. The Court of Appeals of the District of Columbia certified the case to the Supreme Court with this question:

Did the Acts of the appellee [O'Donnell] in retailing at less than the price fixed in said notice on original packages of Sanatogen purchased of jobbers, as aforesaid, constitute infringement of appellants' patent?