The Washington times., 1931-04-14
PATENT POOLS
] SURVIVE HIGH
{ COURT TEST
Practice Upheld in "CraCked
Gasoline CaSe;;" Future
Trust Busting in Doubt

Iuol buollIIJ III DOGO'
The United States Supreme
Courts sweeping exoneratiOn Of
the cracked gasoline trust" which
the Government sought to dis
solve, aroused widespread specu-
lation in legal circles here today
as to its effect on the present
''trust busting" policy of the Jus
tice Department.
Having won the case in lower
Federal courts after a SlXyear
fight, Justice Department of
ficials were confident the high
court would reject the appeal
Of the major oil companies.
Unanimous Against U. S.
Instead, the decision was
unanimous against the Govern
ment and was handed down by
Justice Brandeis, known as one
bf the leading liberals of the
court.
The antitrust case curioUsly
enough was started in 1924 two
months after Harlan F. stone
now associate justice Of the high
court and close friend of Justice
Brandeis, became Attorney Gen
eral in the Coolidge Cabinet. Be.
cause of his part in the early
stages of the case, Justice Stone
took no part in the courts con
sideration. -,
The cracked gasoline case, !"
It was pointed out, hinged upon
the cross-licensing for pooling OF
patents. Huge profits were made
out of the original cracking
patents by the Standard Oil OF
indiana, which later found itself
In competition with other patents.
Pooled Patents Involved
The case assumed a new i'm
portance because of the Govern
ment's radio antitrust suit, which
also involves pooling of patents
and licensing agreements.
:; The justice department, it is
known, will continue the radio
and other antitrust suits. Just
how the Brandeis decision may
affect the radio suit remains to
be seen.
Many modern day trusts" it
is explained, are the product of
patent pooling agreements. The
method used by the oil companies
was approved by the high court,
but it was declared abuses are
subject to the Sherman Law. Said
Justice BrandeiS:
"Where domination jexistS, a
pooling of competing process
patents, or an exchange of
licenses for the purpose of cur
failing the manufacture and
supply of an unpatented prod
.uct, is beyond the privileges
conferred by the patents and
constitutes a violation of the
Sherman Act"
Not Used As Monopoly
He added that an agreement
xor cross-licensing and division Of
royalties, violates the act only
when used to effect a monopoly,
or to fix prices, or to impose other
wise an unreasonable restrain
upon interstate commerce.
The Governments contention
that the oil companies holding
the patents had their use free
while exacting tribute from others,
and thus restrict the product of
their rivals, was rejected by the
court as ignoring the privileges
incident to ownership of patents y
The decision continued:
"Unless the industry is dom
mated, or interstate commerce
directly restrained, the Sherman
act does not require crOss-Iicens-
ing patenteeS to license at
reasonable rates others engaged
in interstate commerce.
The Radio Corporation of
America and others dominant in
the radio field have at times de-
Tended patent licensing agree,
ments on the ground that they
have promoted, rather than re-
strained, competition, although
the patents have given them the
advantage of huge revenue.