CITE:  160 F. 467
CMON:  March 1908
PLAIN: Hotel Security Checking Co.
DEFND: Lorraine Co.
COURT: Circuit Court of Appeals, Second Circuit
DATE:  March 10, 1908


Appeal from the Circuit Court of the United States for the Southern
District of New York.  On appeal from a decree dismissing the bill
in an action on letters patent No. 500,071, for an improvement in the
art of cash-registering and account-checking, granted to John Tyler
Hicks, June 20, 1893.  The opinion of the Circuit Court is reported
in 155 Fed. 298.

  Business method without implementation means is not a patentable art.

JUDGE: COXE, Circuit Judge
Before LACOMBE, COXE, and WARD, Circuit Judges.


The Hicks patent describes and claims a "method of and means for
cash-registering and account-checking" designed to prevent frauds and
peculation by waiters and cashiers in hotels and restaurants. The object
of the alleged invention is accurately to check the account of the cashier
and of each waiter. In carrying out the system, each waiter is provided
with slips of paper, so marked as to distinguish them from those used by
the other waiters in the same establishment. The person in charge of each
department, which fills an order given by waiters, is provided with a sheet
of paper ruled lengthwise in parallel columns, each waiter having a 
particular column exclusively appropriated to him. Each waiter is numbered
or otherwise marked. If numbered, and this is the simplest method of
designation, the number on the slips given him will correspond with his
own number and his orders will be entered in the sheet column bearing a 
similar number. For instance, waiter No. 6 is given the badge showing that
number, which he is required to wear conspicuously; he is also given slips
bearing that number and his orders are entered under column No. 6 by the
person in charge of the department filling the orders. The large sheet on
which the orders of the different waiters are entered is simply a sheet
of plain paper with parallel lines ruled thereon, the columns being
numbered at the top; a sheet of legal cap could easily be utilized for
this purpose. Each waiter is given a number of slips about 3-1/2 by 5-1/2
inches in size, which are blank except that the waiter's number is marked
thereon. If, for instance, water No. 6 receives an order for food, he goes
to the kitchen department and when the order is filled he exhibits his tray
to the checker, who enters the price of each article on the waiter's slip
and also on his own sheet under the column No. 6. The slip is returned to
the waiter, who presents it at the proper time to the customer. Either the
waiter or the customer pays the amount to the cashier who retains the slip.
It is usually sufficient in practice to enter the total of any one order
and not each item separately. If subsequent orders are given either from
the kitchen, the bar or the cigar stand, the same process is repeated and
the amounts entered upon the same slip. At the close of business the sum
of the slips of waiter No. 6 in the hands of the cashier, can easily be
compared with the sum of the items charged to him by the departments 
collectively and the same is, of course, true of all the other waiters.
The amount charged to all the waiters can be compared with the total of
all the items of all the slips in the hands of the cashier and with the
cash reported by the latter. If there has been no carelessness or
dishonesty, the amounts will agree and if there has been, it is easy
to discover where the fault lies.

The specification enumerates ten separate results, which it is alleged
are accomplished by the use of the patented system, all having in view
the protection of the employer from peculation by his servants either
individually or in combination with each other.

The claims are as follows:

    "1.  The herein-described improved means for securing hotel or
    restaurant proprietors or others from losses by the peculations
    of waiters, cashiers or other employees, which consists of a 
    sheet provided with separate spaces, having suitable headings,
    substantially as described, said headings being designatory of
    the several waiters to whom the several spaces on the sheet are 
    individually appropriated, in conjunction with separate slips,
    each so marked as to indicate the waiter using it, whereby the
    selling price of all the articles sold may be entered in duplicate,
    once upon the slip of the waiter making the sale, and once upon
    his allotted space upon the main sheet, substantially as and for
    the purpose specified.

    "2.  The herein-described improvement in the art of securing hotel
    or restaurant proprietors and others from losses by the peculations
    of waiters, cashiers or other employees, which consists in providing
    separate slips for the waiters, each so marked as to indicate the 
    waiter using it, and in entering upon the slip belonging to each
    waiter the amount of each sale that he makes, and also in providing
    a main sheet having separate spaces for the different waiters and
    suitably marked to correspond with the numbers of the waiters and
    of their slips, and in entering upon said main sheet all the amounts
    marked upon the waiters' slips so that there may thus be a duplication
    of the entries, substantially in the manner and for the purpose 

The principal defense is lack of novelty and invention. Section 4886 of the
revised Statutes (U. S. Comp. St. 1901, p. 3382) provides, under certain
conditions, that "any person who has invented or discovered any new and
useful art, machine, manufacture or composition of matter" may obtain a
patent therefor. It is manifest that the subject-matter of the claims is
not a machine, manufacture or composition of matter. If within the language
of the statute at all, it must be as a "new and useful art".  One of the
definitions given by Webster of the word "art" is as follows:

    "The employment of means to accomplish some desired end; the adaptation
    of things in the nature world to the uses of life; the application of
    knowledge or power to practical purposes." 

In the sense of the patent law, an art is not a mere abstraction. A system
of transacting business disconnected from the means of carrying out the
system is not, within the most liberal interpretation of the term, an art.
Advice is not patentable. As this court said in Fowler v. City of New York,
121 Fed. 747, 58 C.C.A. 113:

    "No mere abstraction, no idea, however brilliant, can be the subject
    of a patent irrespective of the means designed to give it effect."

It cannot be maintained that the physical means described by Hicks, -- the
sheet and the slips, -- apart from the manner of their use, present any new
and useful feature. A blank sheet of paper ruled vertically and numbered at
the top cannot be the subject of a patent, and, if used in carrying out a
method, it can impart no more novelty thereto, than the pen  and ink which
are also used. In other words, if the "art" described in the specification
be old, the claims cannot be upheld because of novelty in the appliances
used in carrying it out, -- for the reason that there is no novelty.

The patent seems to us to cover simply a system of bookkeeping made
applicable to the conditions existing in hotels and restaurants. The
fundamental principle of the system is as old as the art of bookkeeping,
i.e., charging the goods of the employer to the agent who takes them. 
Suppose the case of a firm selling goods by agents direct to the public.
Before starting out the agent goes to each department and secures the
goods needed by him, let us say, 5 dozen pairs of gloves, 3 dozen shirts,
100 neckties, 2 dozen pairs of shoes, etc. As a matter of course, the 
bookkeeper charges these items to the agent on the books of the firm and
gives him a bill, or list, with the items and prices entered thereon.
The agent knows from an examination of the list exactly what price he is
to charge to the customer. When he makes remittances to the firm with 
statements showing the goods sold by him and the names of the buyers,
the firm knows by an examination of its books what goods he has sold,
how his sales compare with those of other agents and what amount, if any,
he still owes. This, in essentials, is the scheme of the patent and it
is as old as the laws of trade. The patentee has modified and adapted it
to fit the ephemeral character of the business in hand, but it require
no exercise of the inventive faculties to do this. In a transaction which
is to be concluded within an hour, a ponderous system of bookkeeping is 
unnecessary; but the substitution of a blank sheet laid on the desk for
a blank sheet bound in a book, and a series of slips of uniform size for
the ordinary bill heads, may require ingenuity and be more convenient,
but it adds nothing of substance to the art.

The patentee is evidently an observant man, and, with large experience
in the business, has written a treatise on restaurant account keeping,
containing many valuable suggestions for preventing dishonesty by waiters,
which may be epitomized as follows: -- employ a competent and observant
head waiter, have at least one honest man in charge, give each waiter
a number and slips with a corresponding number, stamp the price of the
articles ordered by him on the slip, and charge the amounts to him on a
sheet of paper under his number, printed or written at the top of the
sheet. Although the record does not show that this identical system was
used prior to the patent, it does how that the underlying idea of keeping
a duplicate record of the items taken by the waiter from the kitchen or
bar, so that the cashier may know whether the proper amount of cash has
been paid or not, had long been known. The essential features were old,
the changes, elaborations and improvements of the patent belong to the
evolution of the business of restaurant and hotel keeping, and would, we
think, occur to any clever and ingenious person familiar with the needs
of that business. The truth of this proposition will be made apparent by
a brief survey of the prior art.

We agree with the judge of the Circuit Court in thinking that the patent
to Smith for "a service and cash check", while not a direct anticipation,
describes a system which in the main corresponds to that of the patent in
suit. Smith says:

    "The invention has for its object to assure returns to the proprietor
    to the full value of the food served by preventing collusion of
    employees and patrons without offense, and also to economize time of
    patrons and employees and assure more satisfactory service."

Smith provides each waiter with a package of checks requiring the waiter
to write his name on the body and coupon of each check. As the waiter
passes the checker on his way to the guest with the food ordered by him,
the checker punches from the check the value of the food on the waiter's
tray. When the order has been fully served, the cashier adds up the sums
opposite the punch marks and writes the sum total in ink next the dollar
mark on the check and coupon.  The cashier has at hand a series of numbered
spindles, on for each waiter, and on the proper one he places the coupon
torn from the check. When a check is paid to the cashier, the coupon is 
returned to the waiter as a voucher and at the close of the day's business
the case in hand must correspond with the amount punched on the checks and
also with the amounts written in ink on the coupons which are delivered up
by the waiters when they have finished work for the day. The Smith claim
is not for a system, method or means, but is for "a service of cash check
provided", etc.

Admitting, arguendo, that a system such as Hicks describes is patentable,
if absolutely novel, we are of the opinion that the improvements of Hicks
over the system disclosed in the Smith patent are such as would occur to
anyone conversant with the business. The testimony also shows that several
years prior to the Hicks application, there was in vogue in Harvey's 
restaurant in Washington, a system similar in all essential details to that
of Hicks'. Although we are not prepared to say that the two systems are
identical in detail, we are unable to discover any patentable improvements
in the latter system over the former. We have no reason to discredit the 
statement of defendant's witnesses that Harvey used a checker's sheet ruled
in parallel columns on which the prices of the articles ordered by the
waiters, respectively, were entered, being also entered on the waiter's

The brass check system which was in use prior to the patent is thus
described in the complainant's brief:

    "In this system the waiter received from the checker a brass check
    having thereon the total amount of the food, etc., served to the
    guest. If the guest gave a second order the waiter gave back the
    check to the checker and received a larger one in exchange. In some
    cases a record was made of the total paid by each guest, but this
    record was not like or comparable with the Hicks main sheet and
    could not achieve its results. There was no division of the sheet
    into spaces for the different waiters and there was no duplication
    of entries. The inadequacy of this system is obvious."

This statement is adopted because of its conciseness and, although it
omits some features of the system, it will close debate upon the facts
if it be accepted as correct. The principal differences between this
system and the Hicks system are the substitution of paper for brass,
recording each item separately instead of the total and using a recording
sheet which is ruled instead of one that was not ruled.

Regarding the entry of the total amount upon the brass, or paper, check
and upon the sheet, it will be remembered, as before stated, that the
patentee says:

    "Each item of the order may be entered separately on the slip and
    on the sheet if so desired, but, in practice, I have found it more
    convenient and usually sufficient for the purposes of my invention
    to enter the whole of any one order as a total."

This language is too plain to admit of doubt. It is a clear declaration on
the part of the patentee that if the total be entered on the slip and sheet
it will infringe the claims. This being so, if a system, similar in other
respects, be found in the prior art where totals are so entered, it will 
anticipate the claims. The complainant has endeavored to explain away this
statement but we are not in the least impressed by his efforts in that

The alleged prior use by McKenna, we dismiss without comment for the reason
that the testimony in its support is too uncertain to satisfy the
requirements of the rule that prior use must be proved beyond a reasonable

If at the time of Hicks' application, there had been no system of
bookkeeping of any kind in restaurants, we would be confronted with the
question whether a new and useful system of cash-registering and
account-checking is such an art as is patentable under the statute. This 
question seems never to have been decided by a controlling authority and
its decision is not necessary now unless we find that Hicks has made a
contribution to the art which is new and useful. We are decidedly of the
opinion that he has not, the overwhelming weight of authority being that
claims granted for such improvements as he has made are invalid for lack
of patentability.

The case at bar is not distinguishable in principle, from the case of
Hocke v. N.Y. Central & H.R.R. Co., 122 Fed. 467, 58 C.C.A. 627,
in which this court, after describing the improvements "for securing
against loss of freight" covered by the claims, said, "All this evidences 
good judgment upon the part of one who is experienced in the particular
business, but it does not rise to the level of invention."

In the case of U.S. Credit System Co. v. American Credit Indem. Co.,
59 Fed. 139, 8 C.C.A. 49, this court had before it a patent for bad
debts, which consist of a sheet provided with separate spaces and suitable
hearings", etc. The court says:

    "There is nothing peculiar or novel in preparing a sheet of paper with
    headings generally appropriate to classes of facts to be recorded, and
    whatever peculiarity there may be about the headings in this case is a
    peculiarity resulting from the transactions themselves. * * * Given a 
    series of transactions, there is no patentable novelty in recording
    them, where, as in this case, such record consists simply in setting
    down some of their details in an order or sequence common to each

It is unnecessary to multiply authorities as we are convinced that there
is no patentable novelty either in the physical means employed or in the
method described and claimed in the Hicks patent.

The decree is affirmed, with costs.