Document: 334 U.S. 131 68 S.Ct. 915 92 L.Ed. 1260 UNITED STATESv.PARAMOUNT PICTURES, Inc., et al. LOEW'S v. STATES. PARAMOUNT SAME. COLUMBIA PICTURES CORPORATION ARTISTS UNIVERSAL COMPANY, AMERICAN THEATRES ASS'N, STATES ALLRED Nos. 79 to 86. Argued Feb. 9, 10, 11, 1948. Decided May 3, Appeals from the District Court of United States for Southern New York. [Syllabus pages 131-138 intentionally omitted] Messrs. Tom C. Clark, Atty. Gen., Robert L. Wright, Washington, D.C., and John F. Sonnett, Asst. States. Mr. Thurman Arnold, American Theatres Ass'n others. G. Jackson, York City, T. Barton, Richmond, Va., W. Allred Davis, Loew's Inc. William J. Donovan, Radio-Keith-Orpheum Corporation Joseph M. Proskauer, Warner Bros. Pictures, James Byrnes, Twentieth Century-Fox Whitney North Seymour, Paramount another. Louis D. Frohlich, Columbia Pictures Thomas Turner Cooke, Universal Co. others George A. Raftery, Artists Corporation. [Argument Counsel Page 139 Justice DOUGLAS delivered opinion Court. 1 These cases are here on appeal1 a judgment three-judge Court2 holding that defendants had violated § 2 Sherman Act, 26 Stat. 209, as amended, 50 693, 15 U.S.C. §§ 1, 2, U.S.C.A. granting an injunction other relief. 66 F.Supp. 323; Id., 70 53. The suit was instituted by under 4 4, prevent restrain violations it. fall into three groups: (1) Loew's, Incorporated, Corporation, Film which produce motion pictures, their respective subsidiaries or affiliates distribute exhibit films. known five major exhibitor-defendants. (2) (3) is engaged only in distribution pictures. majors, through affiliates, own control theatres; do not. 3 complaint charged producer attempted monopolize monopolized production found contrary finding not challenged here. all defendants, distributors, conspired restrained interstate trade exhibition films specific practices we will shortly relate. It also conspiracy nonopolize, monopolized, pictures most larger cities country. vertical combination producing, distributing, exhibiting each Act. distributor-defendant entered various contracts with exhibitors unreasonably trade. Issue joined; trial had.3 No film sold exhibitor right copyright licensed. licenses they issued fixed minimum admission prices agreed charge, whether rental flat amount percentage receipts. substantially uniform been established defendans . Minimum were master agreements franchises made between distributors joint operating majors independent theatre owners covering operation certain theatres.4 By these later often dozens theatres owned particular defendant given area defendants. same requirement granted We stop elaborate findings. They adequately detailed its opinion. See 334—339. 5 two price-fixing conspiracies existed—a horizontal one licensees. latter based express plainly established. former inferred pattern disclosed record. think there adequate foundation it too. necessary find agreement order conspiracy. enough concert action contemplated conformed arrangement. Interstate Circuit States, 306 208, 226, 227, 59 467, 474, 83 610; Masonite Corp., 316 265, 275, 62 1070, 1076, 86 1461. That shown 6 On this phase case main attack decree enjoins any license, except theatres, manner means. argument runs follows: General Electric Co., 272 476, 47 192, 71 362, held owner patent could, without violating grant license manufacture vend could fix price at licensee sell patented article. pointed out exhibitors, but them Copyright 35 1075, 1088, 17 like statutes, grants exclusive rights.5 And argued if patentee can his may article, should be allowed privilege. maintained such privilege essential protect value copyrighted 7 start, course, premise so far Act concerned, illegal per se. Socony-Vacuum Oil 310 150, 60 811, 84 1129; supra. recently Gypsum 333 364, 525, even patentees regiment entire industry containing agreements. What said bar conspiracy, fixing movie industry. Certainly rights no greater than those patene e. 8 Nor result different when come stated findings (70 61): 'In agreeing maintain stipulated price, thereby consents level compete against licensees distributor run total effect separate structure erected regulates licensees' ability another prices.' 9 consequence seems us incontestable. supra, page 401 U.S., 545 S.Ct., 'The rewards flow suppression competition regulation reasonably normally adapted secure pecuniary reward patentee's monopoly.' true present case. For too part general plan suppress competition. where fixes single exhibitor, being contemplation, wholly academic, out. is, therefore, plain applied cases, affords haven more used deter rivals exploitation licenses. 230, 610. 10 Clearances Runs. 11 designed subsequent run.6 distributor-defendants clearance provisions several ways combinations: terms period designated runs; competing over specifically named many days' specified areas towns; clearances distributors. 12 Department below unlawful se But question need consider, ruled otherwise conclusion In view justification assurance give competitor show either time soon thereafter exhibitor's expected income greatly diminished. A interest reasonable, court, unduly extended duration. Thus court concluded although might indirectly affect prices, reasonable restraints 13 determining unreasonable, following factors relevant: 14 involved, set exhibitors; character location iv olved, including size, type entertainment, appointments, transit facilities, etc.; policy showing double features, gift nights, give-aways, premiums, cut-rate tickets, lotteries, 16 (4) fees paid involved revenues derived (5) extent patronage; 18 (6) fact affiliated defendant-distributor circuit disregarded; 19 (7) There substantial 20 reviewed evidence light standards unreasonable. retrace steps. ample show, demonstrated, see 343—346, relation competitive alone justify them.7 vogue had, indeed, acquired applicable situations regard special circumstances sustain support participated evolving system acquiesced furthered existence. evidence, case, therefore imposing unreasonable clearances. 21 enjoined clearances, competition, enforcing receiving excess what granted. relief warranted. 22 Some ask provision construed (or, necessary, modified) allow licensors take consideration fair return licensor. reject suggestion. If allowed, then exhibitor-defendants would have easy method keeping alive least some consequences effective launched. favor requirements restrictions impose upon independents necessity protecting potent weapon leave hands whose proclivity conduct has marked. long theatres. baldest less power restrict way deeme desirable them. setting measure reasonableness needs advantages affords. 23 Whether who party reach. 24 Objection further stating 'Whenever attacked legal decree, burden shall legality thereof.' justified. along favored exhibitors. eliminated completely time, though, thought, equity uproot parts scheme—the valid well invalid—in rid commerce taint Bausch & Lomb Optical 321 707, 724, 64 805, 814, 88 1024. certainly lesser step making prima facie invalid. rest alone. As said, afford. To place best position evaluate effects. Those marked complain carry future within law. Cf. Crescent Amusement 323 173, 188, 65 254, 261, 89 160. Pooling Agreements; Joint Ownership. 25 them, competitive, operated unit, managed committee profits shared according prearranged percentages. provided parties acquire first offering inclusion pool. eliminate pro tanto both features,8 since naturally direct earnings interested. alliances view, nullifying allied group members achieved leases rentals measured earned required dissolution existing pooling arrangement character. 27 stand. bald efforts substitute monopoly strengthen hold alignment competitors side. Clearer difficult imagine. 28 business just mentioned. Many jointly exhibitord efendant independent.9 Court, 'collectively rather competitively.' exhibitor-defendant elimination 'putative itself owner, operate independently.' ownerships meaning 29 ordered disaffiliate terminating ownership acquisitions interests. One authorized buy shows satisfaction finds acquisition 'will feature pictures.' This prohibition interests outlets practical priority situation, managed, natural gravitation interest. becomes device strengthening forming alliance An preference stifle working gathers immunity because subtlety. Each restraint condemned 30 disaffiliation instances independent, 'greater 5% unless 95% more,' defined 'any former, putative picture operator controlled question.' establish, All enjoined. 31 strenuously attacked. asked lack existence independents. statement eliminates competition' mere evidentiary support. facts record devoid history relationship monopolistic practices. fortuio results bankruptcies; investments outside desire capacity on. 32 conceded inquiry acquired. treated relationships alike, insofar concerned. erred. 33 gone confident products inflicted fruits trade, divested. permission defendant. 189, 262, 160; Schine Chain Theatres, 110, 947. Moreover, lawfully acquired, utilized furtherance ends event divestiture likewise 190, 650. situation permitting complete him. 34 Furthermore, join ownership, divorce decreed though affiliation innocently afford opportunity perpetuate effects seems, however, categories listed. apparently involve innocent actual potential operators. improperly retention justified absent resulted. neither nor result. short, reason ban prohibited. lines indicated must await remand cause. 36 Formula Deals, Master Agreements, Franchises. 37 formula deal licensing fee measured, covered agreement, feature's national gross. RKO deals circuits. allocate playing among saw fit. gives bid and, agreements10 open objection. cover sees fit features deems best, leaves discretion circuit. i strict performance described above. number 38 respects supported facts, constitute valid, proper. respects. place, possiblity bidding theatre. small obtain choice runs, put premium size are, devices stifling diverting cream large second purchasing misuse combines closed towns situations. reasons Griffith, U.s,. 100, 941, 947, repeated hardly add arrangements active participants effectuating practice. 183, 259, 39 franchise. franchise contract extends season covers released during agreement. constituted disadvantageous competitors. At read 40 object outlawry points charge illegality restricted circuits circuit, person (except block-booking, practice advert) issue litigation. clouded 'necessarily contravene picture, theatre, highest bidder.' seen hereafter, bidding. problem differently. 41 how able strategic field continue ill dissipate. Franchise employed discriminate know contained discriminatory clauses cannot say matter small. doubtlessly due o necessarily conflict adopted Hence aside examine 42 course agreements, seem stand bottom dependency 43 Block-Booking. 44 Block-booking licensing, condition period. licensed blocks before actually produced. Artists, prevents individual merits. (66 349) 'adds taken exhibited first.' enlargement reliance principle forbids use purchase unpatented materials. Ethyl Gasoline 309 436, 459, 618, 626, 852; Morton Salt Suppiger 314 488, 491, 402, 404, 363; Mercoid Corp. Mid-Continent Investment 320 661, 665, 268, 271, 376. performing entering conditioned licensee's taking features.11 45 approve restriction. law, makes secondary consideration. Fox Doyal, 286 123, 127, 52 546, 547, 76 1010, Chief Hughes spoke follows respecting Congress sole primary conferring lie benefits public labors authors.' author artist serves induce release creative genius. does serve purpose related quality copyright. Where high desired inferior taken, borrows strengthens drawing other. tends equalize differentiate copyrights. Even included package equal quality, increases market some. stands footing whole appeal have. violation involving tying clauses.12 46 Transparent-Wrap Machine Stokes Smith 329 637, 67 610, 91 563, requiring assign improvement patents illegal. decision, confined patents, influenced federal statute governing assignments patents. controlling significance earnest enforcement restriction block-booking very impair profitably. anti-trust laws qualified convenience regulated. vested interest, contravenes laws, receive judicial sanction. 48 suggest groups, requirement, implied, film. refusal copyrights accepted. 49 Discrimination. discriminated exhibitiors unaffiliated kinds provisions. suspension remained eight weeks reinstatement liability reopening; allowing privileges selection films; deductions bills played; moveovers13 road privileges;14 overage underage;15 unlimited time; excluding foreign producers; classification purposes. great witht he exclusion licensor licensee. deemed unnecessary decide themselves make discriminations. thought impossible 51 amply evidence. concur condemns. 231, 182, provide continuance, our unguarded. suggestion phases whom dealt fathered forced onto observed, circumstance help acquiescence scheme much creation promotion one. 53 Second—Competitive Bidding. 54 introduced require basis. Films offered area.16 responsible bidder, rejects offers. picture. Licenses owns directly ninety-five cent more, excluded 55 opposes system. Universal, oppose intervenors representing Justice, proposed originally, speaks strongly 56 blush commend victims ones felt keenly predatory activities freely indulged. massed units largely ruins operators empires exhb itors built. appear boon private favors thrived. after reflection involves judiciary deeply daily nation-wide promises dubious undertaken. 57 'the having equipment yield licensor.' 'shall state desires willing pay feature, specify rental, gross receipts, both, form accept, days it, offers care make.' doubt necessary. auction quite obviously complicated sales cash tabacco, wheat, produce. puts pertinent queries: 'No likely dates, clearance, etc. bids diverse readily compared? compared bid? determined license?' 58 bidder incapable precise definition contain ingredients. Determining reduced formula. distributor's integrity acceptance lower favoritism nigh impossible, perhaps country classifications responsibility. If, bidders entrusted uncontrolled effort standardize 'a licensor' mention matters merely indicate job supervising administration intricate rules priority, length run, areas, return, like. apt close supervision continuous receivership, vast discretion. unsuited affairs management; contempt crude clumsy lacking flexibility effective. Yet delegation management genius conceive execute subtlety reveals, done greatest reluctance. choices faced plain. uproots apparent overall benefit exhibitor. go position. longest purse—the circuits—would preferred enabled business, smaller independents, thus increase thi r industry, cloak court's around protection. advantage financially stronger pause. placed power, court-created powerful factor towards increasing concentration economic cleansing unwholesome strongest financial position, discrimination17 empty promise. connection noted want bidding, invoke 61 Our doubts concerning conpetitive increased pre-empt features. start inventory lack. prospect assured get offset ownership. deprived stability flows relationships. Under bidders. longer depend sources supply ingenuity created. sources, built important items good will, banned, free illegality. designed, remedy difficulty break change how, operation, up markets defendants' dominated. Rather real danger opportunities reluctant alter decrees nature violations. 185, 260, International 332 392, 400, 12, 17. promise little evils implicate heavily details vest considerations conclude fashioned. 63 already preceding alteration hiatus filled cases. hereafter reconsider decree. abundance caution additional word. central arch Its expressly memtion. freedom Disr ict adequacy limited indicated. Third. Monopoly, Expansion Theatre Holdings, Divestiture. First Amendment raised. Associated Press 326 1416, 2013. moving newspapers radio, press guaranteed Amendment. focused noted. chief phrased exhibition, Actually, narrower that. contest business—that first-run defining narrowly intend belittle importance. shows, tha permitted clear denied access none. first-run, second, third, fourth, run. presented highly profitable business. aspects bears remotely, all, press, save timeliness importance controversy relates particularly 1945 somewhat States—3,137 18,076.18 domestic received populations 100,000 majors. none remaining did product majority share 69 about 100,000, exhibition. thr e always runs. 25,000 577 978 cent. 300 towns, mostly 25,000, town. collectively establish claims monopolization organized 'for achieving monopoly' holdings 'alone' (which aggregate one-sixth States), 'do individually exhibition.' town, sufficient proof creating monopoly. resulted inertness competitors, build comparable equipped play relatively nowise approximate exhibition.19 72 respect attempt monopolize. discussed. 'root difficulties,' lay 73 did, enjoin expanding manner.20 refused request holdings. injurious damaging public. score new unlikely years service supplanted 'in latter's demonstrated experience skill regarded largest theatres.' Divestiture was, harsh available alternative accordingly 'at until efficiency tried wanting.' 74 clear, aim exclusionary, i.e. field. words, goals, held. Price, interdependent. relative positions area; second-run next highest, found, effect, distributor, attempts prior-run near patronage possible.' 75 'national monopoly,' starting point relevant determine fell short example illustrate problem. popular sense usually not, vulnerable property maintained, Otherwise, fruits. end enjoining continuance dissolving launched function includes undoing achieved. discussed restore unlawfully obtained punishment familiar restitution. warranted know. beyond objective condemned. 77 solved measuring concluding (and business) dealing projection Parity treatment requires approach geographical division territory intimate appropriate n quiry 78 deficient obscure absence 'purpose' achieve First, presence country, localities. field, constitutes core Section out-laws irrespective (United 224, 225, n. 59, 844-846, 1129), condemns part' commerce.' Any mean appreciable commerce. Yellow Cab 218, 1560, 1564, 2010. Second, 'specific intent' 'purpose create requisite done. intent. So inconclusive. ambiguous recast Third, violate remains unexercised 941), Tobacco 328 781, 809, 1125, 1140, 90 1575, 'to exclude so' coupled intent exercise power. primarily concerned address Here also, parity owners, tied necessitates question. Exploration if, argues, integration distributing view. turns conceived, creates attendant afoul calculated gain segment expansion meet legitimate needs. Reading 253 26, 57, 425, 432, 760; Lehigh Valley R. 254 255, 269, 270, 104, 108, 109, 253. vertically integrated enterprise, aggregations Aluminum America, Cir., 148 F.2d 416), which, unexercised, violates so. 107, 946, earmark carries abuse. thef act created past crush attends Swift 106, 116, 460, 463, 999; 430. Likewise bearing integration, served 430), leverage possible. 80 considered reason, mentioned, aside. doing seen, wanting. Since remand. 81 barring eliminated. question; entirely fresh intimate, erred prohibiting 82 maintains denied, barred. permanent indirect forcing divestiture. reveal full films.21 would, range dissipate Univis Lens 241, 1095, 1408; 1024; 650) Fourth. consent arbitration proved useful operation. indeed problems 'with rare efficiency.' binding parties, bind consented government, acting pursuant powers reserved moved issues complaint. recommended, continued. agree government force submit lieu remedies afforded laws. authorize maintenance sc h procedure operate. mandatory. auxiliary procedure, law court. inaugurated 85 Fifth—Intervention. Certain associations appellant-intervenors 86, intervene orders. filed original motions postponed jurisdiction hear appeals hearing merits 87 Rule 24(a) Rules Civil Procedure, section 723c, provides intervention right, reads 'Upon timely application anyone action: * representation applicant's inadequate applicant bound action.' directed representative suits. protection represented. intervenors, claim prejudicially rights. Terminal St. Louis, 236 194, 199, 408, 410, 535. Their acted plan, intervenors. Thus, argued, agency idea consider argument. assume correct orders denying affirmed. Now basis saying affects Whatever below, appears why stage disappeared. affirmed reversed part, remanded proceedings conformity ordered. Affirmed part. 93 JACKSON took decision 94 FRANKFURTER, dissenting 95 framing Appellate Courts. invested model judgments exigencies case.' guiding consideration, earlier Term sustained Law outcome contested significance, formulation summary bare bones pleadings. 401, 17, 18. bespeaks compelln g fashioned judges recurrence, led abuse district judge 96 authority duty undo, possible, transactions forbidden guard repetition. discharge displace courts write de novo. appellate tribunal fairly claimed possesses experience, understanding prophetic insight better formulate presided wisest judges. 97 litigation amount, regime regime, scope oversight, precedents reports, nor, matter, repository knowledge. Inescapably assessment conflicting interests, quantitatively measurable, prophecy regarding workings untried advance comprehensive 98 crucial drawn drew whether, came fashioning respond abused discretion, treat Discretion means remedies. question, showed sympathetic niggling awareness proper condemnation. Adequate hostile remedied. Court's manifests stout enforce thoroughgoing uncerstanding elucidated thoroughly aware demands manifestly rigors. 99 How now displaces? October 8, 1945, January 22, 1947. body overturning consisted documents. enumeration documents, printed us, pamphlet pages. 460 exhibits printing Government. consists 3,841 mass June 1946, careful opinion, approved here, substantive issues. Thereafter, heard judgment. submitted proposals conclusions After trial, merits, discussion months gestation finally promulgated. 100 I bring myself painstaking process adjudication fors uch sitation discloses arrived absorption shed future. test, ultimately, wisdom men judged events. 101 Accordingly, affirm paticular, controversies arise raises pure sets usefulness' aid powerless parties. Distirct select effectively, friction fruitful methods. bound, circumstances, raise meaning. appoint questions arising appreciate arbitration, adjudicating numberless standing purposes Ex parte Peterson, 300, 543, 919. instrument enforcement. With exception Sec. Expediting February 1903, 823, 29, 238 Judicial Code, amended 13, 1925, 936, 938, 345, 345. convened April 6, 1942, 198, 28, 28. Before negotiations settlement result, November 20, 1940. adjudicated cause action. three-year seek prayed First. Restraint Trade—(1) Price Fixing. 'blanket deal' comprising series transaction, producer, context requires, action, subsidiary affiliate note infra. contracts, elapse Runs successive exhibitions area, subsequent, on, include common management. found: 'Some (to sell) own, lease, control, manage, immediate vicinity opened. status opened location, determination, agreement.' regardless topic, 4,000 feet. independents: Paramount...................... 993 Warner.......................... Fox............................. RKO............................ 187 Loew's.......................... Total........................ 1287 defendants: Parmount-Fox....................... Paramount-Loew's.................. Paramount-Warner.................. Paramount-RKO.................... 150 Loew's-RKO......................... Loew's-Warner...................... Fox-RKO............................ Warner-RKO........................ Total........................... 214 Of 209 affected cent, minimis. Blind-selling whereby decree: 'To trade-shown prior twenty rejection exercised ten licenssee inspect feature.' advanced provision: 'Blind-selling inherently restrictive capable produced prove poor type—a meanwhile unable losing indicates trade-shows, blind-selling, poorly attended choose quantities, protected burdensome option blind-licensed become inspection.' provides, material 'That entitled thereto, complying right: '(d) perform represent work publicly drama or, dramatic reproduced copies sale, manuscript whatsoever thereof; procure transcription thereof exhibited, performed, represented, produced, reproduced; exhibit, perform, represent, produce, reproduce whatsoever;' moveover move continuation release, higher customarily areas. Underage refer using fulfill commitment defaulted Competitive 'competitive area' 'desired exhibitors.' so.' 73, 74. provides: 'Each solely discrimination old customers others.' independently were: 1,395 7.72 cent; 501 2.77 135 .74 636 3.52 109 .60 addition 361 figures connections filmbuying, corporations minority stock located 922 Columbia. description Bertrand, Evans, Blanchard, Motion Picture Industry—A Pattern Control 15—16 (TNEC Monograph 43, 1941). 1943—44 eleven Percentages Total No. "Westerns" Fox....... 33. 8.31 9.85 Loew's.... Paramount. 31. 7.81 9.25 RKO....... 38. 9.57 11.34 Warner.... 19. 4.79 5.67 Columbia.. 41. 10.32 12.24 Artists. 4.04 4.78 Universal. 49. 12.34 14.63 Republic - 14.86 8.66 Monogram 10.58 7.76 PRC 9.07 5.97 ----- ------- Totals.. 397. 100.00 335 excepted jon tly owned, portion 'Except cities, 18,000 distributor. Such distributor.'

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