Evening star., 1940-03-26
Voiding Of Ethyl Corp.
Licenses Gives j. :.
Club Over Monopo|ies
System Of Control Over
Merchandising NuIIified
By Supreme Court
BY ]. A. FOX.

Dy Vs <As H o<As
The Government today was
equipped with new weapon in the
fight on monopolies, a Supreme
Court decision yesterday restricting
materially the rights which indus
tries may exercise under patents.
In unanimous opinion-with JUS
tices McReynolds and Roberts not
participating-the court knocked out
the licensing system under which
the Ethyl Gasoline Corp. controls
the distribution by refiners and job
bers of almost 80 per cent Of the
high-test motor fuel in this coun-
try, upholding the Government con-
tention that it violates the antitrust
laws.
The Ethyl Corp, owned jointly by
Standard Oil, General Motors and
E. 1. du Pont, had defended the
licensing system on the ground that
Its patents cover the whole field of
distribution by applying to the tetra-
ethyl lead fluid that improves the
quality of the gasoline with which
1t Is blended, the combination Of
this fluid and gasoline by refiners
to produce a fuel with anti-knock
characteristics and the method of
using such fuel in internal COM
bustion engines. The Government
contended the patent rights ended
when the fluid was sold to refiners,
and that the basic purpose" of the
licensing system was Ito compel
jobbers to maintain resale prices of
gasoline"
Important" Says Arnold.
The Supreme Court said that anti
trust and patent laws do not sane
ton regulation of prices and the
suppression of competition among
the purchasers of the patented
article. bringing an immediate
statement from Thurman Arnold,
Assistant Attorney General in
charge Of antitrust prosecutions,
that 1t was "the most important
decision on the use of patents to
restrain trade that ever has been
handed down by any court" He
added:
The decision in effect goes far
beyond the oil industry. 1t will
serve as very helpful guide to the
department in our general investiga-
ton Of patents"
The opinion, delivered by Justice
Stone, affirmed a decision from the
District Court of the Southern Dis
trict of New York, which had en-
Joined further operation of the
licensing system because a small
group Of price-cutting jobbers had
been excluded from dealing in the
patented product The lower court
said, however, that clear case
OF price maintenance" had not been
made out.
Pervasive Influence.
Justice Stone said that while not
all applicants for licenses) who
have failed to maintain prices and
marketing policies have been. re-
jected, the record leaves no doubt
that appellant (EthyD has made
use Of its dominant position in the
trade to exercise control over prices
and marketing policies of jobbers in
. sufficient number of cases and
with sufficient Continuity to MAKE its
attitude toward price-cutting a per-
vasive influence in the jobbing
trade"
In setting up the limits of the
corporations patent rights, Justice
Stone said that by its sales to re-
hners the organization "relinquishes
its exclusive right to use the pat
ented fluid and it relinquishes to
the licensed jobbers its exclusive
rights to sell the lead-treated fuel
by permitting the licensed refiners
to manufacture and sell the fuel to
them"
by the authorized sales of the
fuel by refiners to jobbers," the
court continued, "the patent mo-
nopoly over it is exhausted, and
after the sale neither appellant nor
reflners may longer rely on the
patents to exercise any control over
the price at which the fuel may be
resold."
In another decision, read by JUS
tice Roberts, the court ruled that
the Communications Commission. In