Scottish Court of Session Decisions

This is an action at the instance of Mrs Honeyman Gillespie, the heiress of entail in possession of the estate of Torbanehill, with concurrence of her husband, Mr Gillespie, against Mr Young, manufacturing chemist, Glasgow, and two firms of chemists, of which he is a partner. The summons concludes for £32,900 of damages. The estate of Torbanehill contains a seam of a valuable mineral substance, known as the “Torbanehill mineral,” which the pursuers say is a bituminous shale, and not a coal. The mineral is extensively used in the distillation of paraffine oil. The defender, Mr Young, in 1850 obtained a patent giving him the exclusive right to manufacture paraffine from bituminous coal; and after procuring his patent he advertised that it included the manufacture of the pursuer's mineral, and raised actions against several manufacturers who had purchased Torbanehill mineral for the distillation of paraffine. The pursuers, who received a lordship from their mineral tenants of one-seventh of the actual output from the mines, make the following averments in support of the action:—

“5. The Torebanehill mineral of the pursuer's estate is, as already mentioned, a peculiar species of bituminous shale, and is not in fact, or in contemplation of law, comprehended under the term “coal” used in the specification of the defender, Mr Young s invention; nor does the patent right granted to the defender, as limited by the specification thereof, give him or his assigns, for the period therein mentioned, the exclusive privilege of obtaining paraffine oil, or other products of distillation, from the said Torbanehill mineral, or from any other description of bituminous shales. On the continent of Europe, in countries where fiscal or import duties are laid on coal, the Torbanehill mineral is admitted duty free, because it is not coal, but a bituminous shale or schist. In particular, the mineral in question, qua a bituminous schist (schiste bitumineux), has been admitted free of the duty of coal into France, and into Prussia and Germany. More specifically still, it has been admitted in that character into the city of Paris, and into the port and city of Marseilles. It has been so admitted also into the port and city of Frankfort-on-the-Maine, there to be used; as also in transitu to the different cities and States of the Zollverein, all since the year 1851.

7. Notwithstanding that the defenders' patent right is limited by the terms of the specification to the obtaining the produce therein mentioned from coal, and that the manufacture of these products from bituminous shale was public property at and prior to the date of their said patent, the defenders have for a long time, and at least for the whole period since the commencement of the year 1860, most falsely, fraudulently, and maliciously represented that their patent gives them the exclusive privilege of manufacturing and obtaining paraffine oil, or oil containing paraffine, by distillation from the Torbanehill mineral, which they term Torbanehill or Boghead coal, or Boghead gas coal, in order to give colour to their assertion of an exclusive privilege of converting the same into paraffine oil. And they have at various times during the aforesaid period threatened to institute legal proceedings against parties who were in the course of exercising their lawful right of manufacturing paraffine oil from the Torbanehill mineral, upon the pretext that such manufacture was an infringement of their alleged patent right. They have, by such false, fraudulent, and malicious representations and threatened proceedings, induced various manufacturers and others to take out licenses from them, and to pay them large sums of money as lordship for the privilege of applying their patented process to the manufacture of paraffine oil from the Torbanehill mineral; and they have, by such false, fraudulent, and malicious representations and threatened proceedings, prevented various manufacturers and other persons from engaging in or carrying on the manufacture of paraffine oil from the Torbanehill mineral, and from making purchases of the said Torbanehill mineral from the pursuers; by all which the market-value of the pursuers' mineral estate, and of the mineral wrought therein, and belonging to them, has been greatly depreciated, and the sale thereof impeded, and the pursuers injured in their rights as mineral proprietors

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and otherwise, as hereinafter more particularly set forth. The defenders knew that the said representations which they so made were false; and, in particular, they knew that their patent did not extend to or apply to the manufacture of oil or paraffine from the Torbanehill mineral.

3. In the autumn of 1862 the defenders caused to be inserted in the Times, and in various newspapers having an extensive circulation in the United Kingdom, and particularly in a number of the Glasgow Herald, published in Glasgow on 16th September 1862, an advertisement in the following terms:—

Young v. Fernie.

Caution.

It having come to the knowledge of the Paraffine Light Company that the defendant in the above suit was manufacturing paraffine Oil at certain oil works at Leeswood, and at the St David's Works at Saltney, both in the county of Flint, and thereby infringing the letters patent granted to Mr James Young, an application was on the 10th instant made to the Vice-Chancellor Stuart for an injunction to restrain such infringement, and his Honour directed immediate notice to be given to the defendant of the application for such injunction against him;” and about the same time the defenders also caused to be inserted in the Times, and in various newspapers having an extensive circulation in the United Kingdom, and particularly in the Glasgow Herald of 1st October 1862, an advertisement in the following terms:—“All persons are hereby cautioned against purchasing or selling any paraffine oil, by whatsoever name it may be sold, or paraffine, made in infringement of Mr James Young's patents, and against manufacturing any such oil or paraffine; as proceedings will be forthwith taken against any person who may be found to be so offending. (Signed) J. Henry Johnson, 48 Lincoln's-Inn-Fields, London, W.C., Solicitor for the proprietors of Young's paraffine oil patents.” The defenders also caused to be inserted in the Times of 2d October 1862, and in subsequent impressions of that newspaper, an advertisement in the following terms: — “Young's Paraffine Oil.— Young and Others v. Fernie (The Mineral Oil Company). “All persons are hereby cautioned against purchasing or selling any paraffine oil, by whatever name it may be sold, or paraffine, made in infringement of Mr James Young's patents, and against manufacturing any such oil, or paraffine, as proceedings will be forthwith taken against any person who may be found to be so offending. (Signed) J. Henry Johnson, 47 Lincoln's-Inn-Fields, London, W.C., Solicitors for the proprietors of Young's paraffine oil patents.” The defenders further caused to be inserted in the Times of 4th December 1862, and in subsequent impressions of that newspaper, an advertisement in the following terms:—“Young's Paraffine Oil.— Young and Others v. Fernie (The Mineral Oil Company). The advertisement inserted by the defendant in the above suit, containing a statement that the motion to restrain him from manufacturing paraffine oil in infringement of Mr Young's patents has been refused, the public are hereby informed that the said motion has not been refused, but simply adjourned until the suit is heard, and that meanwhile the defendant has been ordered to keep an account. All persons are again cautioned against buying or selling any paraffine oil made according to Mr Young's patent which has not been manufactured by Mr Young or his licensees. (Signed) J. Henry Johnson.”

At the time when those advertisements were issued, it was matter of public notoriety that the proceedings instituted by the defenders against Mr Fernie and his partners, referred to in these advertisements by the defenders, were taken in respect of the manufacture by that company of paraffine oil from bituminous shale. The proceedings before Vice-Chancellor Stuart were published in the newspapers, and the ground of the defender's proceedings were at all events well known to persons commercially interested in the manufacture and sale of paraffine oil. By those advertisements the defenders meant to. represent, and did represent, that the manufacture of paraffine oil from bituminous shale, such as the Torbanehill mineral, was infringement of the patent granted to Mr Young as aforesaid, and that persons purchasing or selling paraffine oil obtained from bituminous shale such as the Torbanehill mineral, or manufacturing oil so obtained, were liable to civil prosecution as for an infringement of their patent, and that such proceedings would be instituted against them by the defenders; and the advertisements were so understood by manufacturers and others interested in the manufacture and sale of the oil.”

The alleged wrong for which damages are sought in the present action is that the defenders diminished the marketable value of that portion of the pursuers' excavated mineral which came into their own hands as lordship from their tenants. This is said to have happened partly by persons being deterred altogether from purchasing the mineral from the pursuers, and partly by others who did purchase being led to offer a smaller price than they would have given if it had not been for the proceedings complained of. The mode in which the defenders are said to have caused this injury is that they wrongfully represented that their patent comprehended the manufacture of paraffine from the pursuers' mineral, so that it could not be legally carried on without a license from them, for which they charged a tax of so much per ton of the mineral manufactured; and they thus induced the persons who purchased from the pursuers to pay that tax or license, thereby diminishing the price which they could afford to give for the mineral, and deterring others from purchasing at all, by the belief that they would be liable for damages for infringement of patent.