The result of the manufacturing business is an excess of receipts over expenditures of $37,074.70. This statement, however, allows nothing for manufacturer's profits. An allowance for such profit ought to be made but in this case the object is to eliminate from the gross receipts such profits as have in any manner accrued from or by reason of the inventions claimed in the patents. Now receipts or profits that result from business talents or skill in manufacturing or in financeering are not receipts or profits in any manner accruing from or by reason of an invention. In the case of Seymour and Morgan vs. McCormick-Howards Reports Vol. 16 p. 480, the Supreme Court of the United States held that the ruling of Judge Nelson that the whole profits of the manufacture of Reaping machines in which one small part of the machines infringed a patent was to be considered as accruing from the use of the patented part was erroneous, and that a reasonable manufacturer's profit for the use of the Capital so, in addition to the actual cost of the machine must first be deducted from the gross receipts, and if then there was any excess, that might be assigned to patents. This decision I should deem binding and conclusive upon the subject even if I did not think that the values of business capital and talent are as fairly charges against the receipts of business as the values of a business house or tools.
An Inadequate Profit
In this case there is only an excess of $37,074.70 of the receipts over the expenditure or something less than 14 per cent upon the gross amount of sales. This is a very inadequate profit for manufacturing and selling, but it is all there is, and it is all that I can allow.
If the excess of the receipts over the expenditures had amounted to three times fourteen per cent, I should have had no hesitation in allowing the whole of it for manufacturer's profit, and should not have deemed it more than a reasonable allowance in view of the testimony of Long, which shows that his firm have made a profit of over fifty per cent after paying patent fees, on their manufacture of reapers.
It seems to be supposed from the reference which has been made to Commissioner Holt's decision in the case of McCormick's application for the extension of his patent of 1845, that he entertained views at variance with those I have expressed as to the justice of allowing manufacturer's profits as a part of the expenditure, and as an offset against the receipts, but a careful examination of that opinion will show clearly that Mr. Holt was not willing to allow a charge for the use of Capital, and for wear and tear of machines (which are the Constituent elements of a manufacturer's claim to allow for profit) and then, again allow a second or duplicate charge for the same things under the name of manufacturer's profits. This is the extent to which Mr. Holt goes, and I fully agree with him.
The expenditures on account of the patents and the sale of rights and licenses under the same are:
| For three quarter of patentee's labor and expense | $27,024.68 |
| For sundry legal and traveling expenses | 44,562.88 |
| $71,587.56 |
The receipts on the same account are:
| Cash for licenses, sale of rights, etc. | $92,788.38 |
| Notes and unsettled accounts | 23,748.89 |
| License fees estimated for 1861 | 10,000.00 |
| $126,537.27 |
showing that the receipts exceed the expenditures by $54,949.71 or $13,737.42 for each of the four patents.