Source: https://supreme.justia.com/cases/federal/us/231/222/
Timestamp: 2019-04-21 14:15:48+00:00

Document:
One who sets up a federal statute as giving immunity from a judgment against him may bring the case here under § 709, Rev.Stat., now § 237 of the Judicial Code, if his claim is denied by the decision of the state court.
No more than the patent statute was the Copyright Act intended to authorize agreements in unlawful restraint of trade and tending to monopoly in violation of the Sherman Act.
The Sherman Act is broadly designed to reach all combinations in unlawful restraint of trade and tending because of the agreements or combinations entered into to build up and perpetuate monopolies. The act is a limitation of rights which may be pushed to evil consequences, and may therefore be restrained. Standard Sanitary Mfg. Co. v. United States, 226 U. S. 20.
As the agreement involved in this case went beyond any fair and legal means to protect trade and prices, practically prohibited the parties thereto from selling to those it condemned, affected commerce between the states, it was manifestly illegal under the Sherman Act, and was not justified as to copyrighted books under any protection afforded by the Copyright Act.
that ground, and it is unnecessary for this Court to decide other federal questions involved.
Quaere, and not now discussed or decided, whether an original action can be maintained in the state courts for injunction and damages under the Sherman Act.
Judgment based on 199 N.Y. 548 reversed.
The facts, which involve the construction of the Sherman Anti-Trust Act and its application to agreements regarding the sale of copyrighted books, are stated in the opinion.
This is a writ of error to review a judgment of the Supreme Court of the State of New York, rendered on remittitur from the Court of Appeals, refusing to grant to the plaintiffs in error an injunction restraining any interference with their purchase and sale of copyrighted books, and damages, the defendants acting under an agreement alleged to be violative of the laws of New York and the Sherman Anti-Trust Act (Act of July 2, 1890, 26 Stat. 209, c. 647).
interlocutory judgment there entered having been reversed upon appeal to the Appellate Division of the First Department, the Court of Appeals, permission having been granted to appeal and the question certified, affirmed the decision, and held that, so far as the bill related to copyrighted books, the demurrer was good, but that as to uncopyrighted books, the complaint stated facts sufficient to constitute a cause of action. 177 N.Y. 473.
Amended answers having been filed, upon trial to the court without a jury, the court made findings of fact from which it appears that the material allegations of the complaint are true, as above set forth, and further, that about April 1, 1904, and after the decision of the Court of Appeals reported in 177 N.Y., the associations amended their resolutions and agreements so as to restrict the application and operation thereof to copyrighted books only; that, about January 19, 1907, the Publishers' Association revoked all its former resolutions and adopted a new resolution, but that the associations had continued the same course as to copyrighted books as was followed before the passage of such resolution. The court concluded that the resolutions and agreements, so far as they related to uncopyrighted books, were unlawful and contrary to the laws of New York, and to that extent granted relief by way of injunction and damages, but held that, as to copyrighted books, the agreements, resolutions, and acts of the defendants were not unlawful, and entered an interlocutory judgment accordingly, and in its opinion the court stated that the former decision of the Court of Appeals in the case (177 N.Y. 473) was controlling. Plaintiffs in error excepted to the conclusions of law made by the court, restricting the illegality of the combinations to uncopyrighted books, and requested that certain conclusions be made, and excepted to the refusal to find the conclusions submitted by them.
relief as to copyrighted books, the plaintiffs in error appealed to the appellate division, which, also upon the authority of 177 N.Y. 473, affirmed the interlocutory judgment, and judgment of affirmance was entered in the supreme court; and, with permission, an appeal was taken to the Court of Appeals, which answered in the negative the question certified by the appellate division as to whether plaintiffs in error, insofar as copyrighted books were concerned, were entitled to relief, adhering to its previous decision (177 N.Y. 473). 193 N.Y. 496, 86 N.E. 525. Judgment was so entered on remittitur to the supreme court. The report of the referee appointed to ascertain the amount of the damages sustained by the plaintiffs in error in the sale of uncopyrighted books having been filed and approved, final judgment was entered in the supreme court, granting an injunction and damages as to uncopyrighted books only, and, upon appeal to the Court of Appeals, that court affirmed the final judgment (199 N.Y. 548) and remitted the case to the supreme court. Judgment on remittitur was accordingly entered, and this writ of error sued out to review that judgment.
"Are the plaintiffs, under the findings of fact contained in the decision in this case, entitled, insofar as copyrighted books are concerned, to the relief demanded in the complaint, or to any relief as against the defendants in this case?"
Upon the record, the Court of Appeals, by a majority, adhered to its former decision notwithstanding the decision of Bobbs-Merrill Co. v. Straus, 210 U. S. 339, which had in the meantime been decided by this Court, and held that, as the object of the copyright and patent statutes was to give monopolies, contracts made by the owners of copyrights to secure the fullest protection in the enjoyment of their monopolies would not be condemned by the courts as being in unlawful restraint of trade, at least not until the Supreme Court of the United States had pronounced differently (193 N.Y. 496). Three of the justices dissented upon the ground that the agreement was clearly one in restraint of trade, as they had theretofore held, and that the decision of this Court in Bobbs-Merrill Co. v. Straus, supra, had so construed the Copyright Act as to limit the right of a copyright holder to the sale of copyrighted works, and did not have the effect to protect such monopolistic agreements as were shown in the present case. As to uncopyrighted books, the views theretofore expressed were maintained by the court, and, upon remittitur, judgment was entered granting injunction and damages as to such books.
"VII. That such resolutions and agreements purporting to restrict the effect of the combination, arrangement, or contracts to copyrighted books likewise affect an article of interstate commerce, and was unlawful and contrary to the aforementioned statute [the Sherman Anti-Trust Act] of the United States as being in restraint to interstate commerce and tending to create a monopoly."
"IX. That the owners of several separate copyrights are not empowered to enter into any contract or agreement or combination between themselves concerning the supply and price of books published under their separate copyrights which would be unlawful and contrary to the statutes of the United States against combinations in restraint of trade or for the purpose of creating a monopoly if entered into with reference to the supply or price of uncopyrighted books."
now § 237 of the Judicial Code. Nutt v. Knut, 200 U. S. 12; St. Louis & Iron Mountain Ry. v. Taylor, 210 U. S. 281; St. Louis & Iron Mountain Ry. v. McWhirter, 229 U. S. 265. The motion to dismiss for want of jurisdiction must therefore be overruled.
This Court, in the case of Bobbs-Merrill Co. v. Straus, supra, held that the Copyright Act did not grant the right to fix a limitation upon prices of books at subsequent sales to purchasers from retailers by notice of price limitation inscribed upon the book, and, construing the Copyright Act, held that, in conferring the right to vend a book, it did not intend to confer upon the holder of the copyright any further right after he had exercised the right to vend secured to him by the act.
"Rights conferred by patents are indeed very definite and extensive, but they do not give any more than other rights an universal license against positive prohibitions. The Sherman law is a limitation of rights -- rights which may be pushed to evil consequences, and therefore restrained."
to reach all combinations in unlawful restraint of trade, and tending, because of the agreements or combinations entered into, to build up and perpetuate monopolies.
their members continued the same methods as to ascertaining the supply of copyrighted books of the plaintiffs in error, as to cut-off lists and circulars to the trade, and that, although in 1907 the resolution of the Publishers' Association was modified so that the "agreement" became a "recommendation," the cut-off lists were still issued, with plaintiff's name thereon, and that the dealers still refused to supply plaintiffs in error with books of any kind. And it also appears from the finding of facts that the members of the associations resided in and carried on the business of selling books in many different states, and purchased books from persons in many states other than the one in which they resided and did business, and that the rules, regulations, and agreements of the associations were enforced against all publishers and dealers in books throughout the United States, whether they were members of either Association or not, and whether they purchased books in one state for transportation and delivery in another, or for delivery in the state where purchased.
We agree with the Court of Appeals in its characterization of the agreement involved in this case, about which there seems to have been no difference of opinion except as to the supposed protection of the Copyright Act. It manifestly went beyond any fair and legal agreement to protect prices and trade as among the parties thereto, and prevented, as the Court of Appeals said, when dealing with uncopyrighted books, the sale of books of any kind at any price to those who were condemned by the terms of the agreement, and with whom dealings were practically prohibited. We conclude, therefore, that the Court of Appeals erred in holding that the agreement was justified by the Copyright Act, and was not within the denunciation of the Sherman act, and in denying, for that reason alone, the right of the plaintiffs in error to recover under the state act as to copyrighted books.
This view of the case renders it unnecessary to decide whether an original action can be maintained in the state courts seeking an injunction, and to recover damages under the Sherman law.
As the federal question, made in the manner which we have stated, was, in our view, wrongly decided, and such decision was the basis of the judgment in the state court, the judgment of that court must be reversed. Murdock v. Memphis, 20 Wall. 590, 87 U. S. 634.
Judgment reversed and case remanded to the state court whence it came for further proceedings not inconsistent with this opinion.

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