CITE:  53 F. 818
CMON:  January 1893
PLAIN: United States Credit System Co.
DEFND: American Credit Indemnity Co.
COURT: Circuit Court, S. D. New York
DATE:  January 6, 1893

In Equity. Bill by tile United States Credit System Company against the
American Credit Indemnity Company for the infringement of letters patent
No. 465,485, dated December 22, 1891, and granted to Levy Maybaum for means
for securing against excessive losses for bad debts. Heard on demurrer to
the bill. Demurrer sustained.

In a prior suit between the same parties upon this patent, the circuit
court for the northern district of Illinois also sustained a demurrer to
the bill for want of patentable invention. See 51 Fed. Rep. 751, where a
full description of the alleged invention, accompanied by cuts showing the
ruled forms of the patent, may be found.

  Business method for using an insurance plan form is not novel.
  Methods of transacting common business do not seem to be patentable
  as an art.

JUDGE: WHEELER, District Judge


This bill is brought upon letters patent No. 465,485, dated December 22,
1891, and granted to Levy Maybaum, assignor to the plaintiff, for "means
for securing against excessive losses for bad debts", makes profert of
them, and is demurred to. As the patent contains a grant under the
constitution and laws of the United States "to the patentee, his heirs or
assigns, for the term of seventeen years, of the exclusive right to make,
use, and vend the invention or discovery throughout the United States and
the territories thereof", and the bill alleges infringement, the defendant
must be put to the statutory defenses, unless what the patent covers is so
far from any patentable invention or discovery as to be void, and require
no defense whatever. Rev. St. U. S. Section 4884, 4920. A bill upon such
a void patent would seem to require no answer, (Hill v. Wooster, 132 U.S.
693, 10 Sup.Ct. Rep. 228); therefore it may be met by demurrer,
(Post v. Hardware Co., 26 Fed. Rep. 618).

The invention sought to be covered by this process is of a method of
insuring against loss by bad debts in different kinds of business above
the average ascertained loss in such business by a form of guaranty entered
into on ruled pages of books, with headings and margins to columns and
lines, showing in spaces the names of the insurer and insured, and the 
terms and conditions of the guaranty.

The claims are for the means of securing merchants and others from  
excessive losses by bad debts, consisting of these sheets having suitable
spaces for, and headings and margins showing, the particulars of such
contracts. The ruling of sheets and pages of books into columns and spaces,
and placing headings and margins to show terms and particulars of business
arrangements and transactions, were old and well known within the usual
and customary art of persons skilled in stationery before the time of this
alleged invention.  The arrangement of such spaces, headings, and margins
to show the parties to, and terms and details of, any particular contract,
would not be new to persons skilled in that art, and could not amount to  
any patentable invention or discovery. Baker v. Selden, 101 U. S. 99.  
The novelty, if any, must consist in the terms of the contract of
indemnity arising out of the plan of insuring only against excess above  
the average of losses from bad debts in similar lines of business, and  
in the embodiment of these terms upon the sheets or pages.

But plans of indemnity against losses or parts of losses from casualty
or misfortune by contracts of insurance or indemnity in various forms were
in common use before, and not, in any sense, novel. Besides this, the terms
of contracts rest in the agreements of those making them, and coming to
such agreements is not a new art. The practice of the plan, as set forth
in the specifications of the patent, seems to have been intended for
insurers or guarantors, and the utility of it to consist in the proposal
of such terms as would be desirable to those wanting indemnity; but the
art of making proposals for contract's would not be any more patentable
than that of making the contracts themselves. This patent is different in
this respect from that in Munson v. Mayor, etc., 18 Blatchf. 237,
3 Fed. Rep. 338; Id., 124 U.S. 601, 8 Sup. Ct. Rep. 622. That was for a
contrivance to preserve paid coupons and bonds, and might be patentable
as a machine or manufacture; this is for a method of transacting common
business, which does not seem to be patentable as an art. These views
correspond with those of Blodgett, J., with reference to this same patent  
in a suit between these parties, as reported in 51 Fed. Rep. 751; but,  
as those views are said to have been published by some mistake, the  
subject has been examined here, instead of merely following that case,  
as would otherwise be usual.

Demurrer sustained.