South Bend news-times. (South Bend, Ind.) 1913-1938, 1922-04-18
SUPREME COURT
RULES AGAINST
PATENT LEASES
Wis Victory in Long Fought
Suit With United Shoe
Machinery Corp.
VIOLATES CLAYTON ACT
Court Holds Illegal Forcing
Machine Users to Purchase
Supplies Also.


government Monday won JOB thc SUI
Tteme court in She case brought by
the United Shoe Machinery Corp. and
others 10 have set aside the restrain
.lZ order prohibiting them from
using certain lease clauses i'm their
contracts for the rental of patented
machinery.
The supreme court affirmed the
decree of the United States district
court at 81. Louis. which enjoined
the corporation under the Clayton
Act
The lower federal court prohibited
the corporation from compelling, by
lease agreements. the exclusive use
of its machines. and from enforcing
an Alternative royalty clause found
90 be prohibiuve. upon all footwear
manufactured loo factories where
machines OF competitors were also
i'm use. 10 also held invalid the
agreement by which the corporation
required those using its machines To
purchase supplies OF il.
Involves Big Question
Tho extent 90 which manufacturers
It's use Pay those 10 whom il is rented
is involved boo the proceedings Of the
Supreme Court brought 10y the gov
eminent against the United Shoe
Machinery Corp. and its affiliated
CON pauies. under the Clayton Act.
The case was twice orally argued
before the court.
When the lower federal courts de
cided against the government I'm its
suit against the corporation under
jhc Sherman 1uti-trust law congress
enacted the Clayton law. and while
the sherman Act ease was pending
iu the Supreme Court. the govern.
ment obtained AN injunction against
tho corporation in the United states
district court at 50. Louis restraining
il temporarily from contiuuing its
lease practices until the courts could
determine whether such practices
were In violation Of Section three o.
tine CLAYTON Act. Il was claimed 10y
thr government that the section was
drafted with particular reference &C.
the leases of the corporation. II
provided that it shall be unlawful
for any person engaged i'm interstate
commerce to lease patented machin-
ery or 90 fix it's rental on the con-
dition that the person leasing the
sImC shall not use or deal iu the ma
thinCrv. supplies and other Conmod-
tiles of competitor. where the ef-
feet of tho lease may bc to substan-
TALLY lessen competition or tend TO
create a monopoly"
Violate Clayton Act
The preliminary injunction seaut-
Cd by Judge Dyer was cancelled 10y
the circuit court of appeals mt ST.
Paul Evidence forming am cDor-
moU~ly voluminous record was taken
hy au examiner. for the United States
district court at ST. Louis and Judge
Ti.ier ~ittiu- granted am injunction
on March 81. 1920 restricting the
corporation from continuing its lease
pl,euces. holding them 90 be De- vio-
ntiou of the Clayton Act The i'm
junction was suspended ny the SUI
preme Court pending the final deter
miuation of the case.
The Supreme Court i'm the mean
time in May 1918. decided in Favor
of the corporation under the Sher-
man ANTITRUST lau. holding the
lease clauses used lbs thr corporation
% proper exercise of its patent rights,
and that the corporation was NOT am
.rlawfl combination iu restraint oi
trade
The corporation retaining own
or-hIp of the patented machines 10
manufactures contendcd that 10y
shipping them to its employees ut the
uIac, where they Install them all
Interstate features OF the transaction
are concluded before the leases are
-.gued s close inspection OF the
machines is maintained 10y the cor
Uor.rou which also repairs them
Will. the form of lease now be- use
i- mot tbt same which the courts
passed upon BOO the Sherman act
case the government insists that in
its tying provisions II is illegal. as
sorting that shoe manufacturers are
offered the opr1u 81 exclusively us
ing the machines ass well as certain
supplies sold 1y The corporation. on
PAVING royalty. based upon the
tota output Of the factory II ma
chimes of competitors are also Ised
The ROYALTY the government insisted
is prohibit.Ne. and the shoe manufac-
,u-er iu actial experience IS offered
$40 alternative. bur must operate un-
der the lease which restricts him &c
tac machines made hv the corpora
ton
The government stated Don the CLAY
CON Act ease that lt was proceeding
upon The assumption that the or
-arizatiou OF the United Company
was lawful" and declared that 10
makes no complaint OF The size OF
the defendants. or in itself for the
.ilt ~ their business
Organization Lawful.
The government declared tlat ii
only sought 90 prevent the further
use OF certain leases which the dis
trict court found forbidden hy the
clayton Act. To is not cOntended.
the government stated that the
overwhelming preponderance % the
United Company in the particular
FIELD Is due wholly 20 tho le1sinE
practice in question" II Is only
necessary 90 prove. the goverament
claimed. that the lease clauses OBJ
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