Opinion ID: 1503668
Heading Depth: 1
Heading Rank: 7

Heading: The Piston Patent Situation.

Text: The plaintiff charges Alcoa with three kinds of misuses of patents: (1) an unlawful limitation of the production of licensees of its own patents; (2) accepting a license agreement from another patentee that unlawfully limited its own production; (3) using its own patents to force the purchase of ingot upon licensees. The situation was somewhat complicated. In 1922 a number of persons owned fifty-three design patents for automobile pistons; and Alcoa owned forty-five such patents; it also owned some process patents for making pistons. All the design patents were put into a pool, and Alcoa was made the exclusive licensee of all with power to sub-license. It then issued sublicenses to three companies of all the patents, limiting the number of pistons which each licensee could make. The plaintiff argues that, although this limitation was lawful as to the design patents, it was not lawful as to the process patents, because such a limitation is a way of extending the monopoly. We need not pass upon that proposition, although the Sixth Circuit upheld it in Barber-Colman Co. v. National Tool Co., 6 Cir., 136 F.2d 339, refusing to follow our decision in Straight Side Basket Corporation v. Webster Basket Co., 2 Cir., 82 F.2d 245, which was to the contrary. The decisions of the Supreme Court plainly show an increasing tendency not to allow a patentee to make use of the sanctions which follow upon an unrestricted prohibition of the right to make, vend and use. Although even at common law a patentee was not allowed to attach any condition upon the resale of a patented product, made and sold by himself, he was free to limit the price at which a licensee might himself sell what the licensee made, and it is not apparent to us what difference there is between that, and setting a price upon, or limiting the quantities of, a process. However, the whole subject is plainly in flux, and we do not wish to pass upon it unless we have to do so. In the case at bar we do not, because, granting all that the plaintiff says, it did not prove, in the case of any of the sublicensees, that the pistons were not covered by the design patents, as well as by the process patents; and if the limitation was valid upon the design patents, it made no difference whether or not it was invalid upon the process patents. The next charge arises from a transaction between the Bohn Aluminum and Brass Corporation and Alcoa in 1927. The Bohn company had a product patent for a strut type piston, which Alcoa wished to make; and the Bohn company agreed to give Alcoa a license under this patent in exchange for Alcoa's license under the design and process patents. Alcoa's liability for royalties were to be computed as follows: it was not to pay any royalties, unless it made more than 5,000,000 pistons of all sorts in any year; but, if it did, it was to pay a royalty upon the excess until it had paid upon all pistons made during that year under the Bohn patent. The plaintiff argues that it was unlawful for the Bohn company to license Alcoa under an agreement which exempted it from any royalties so long as it kept its total production of pistons below the stint, and that, if so, it was equally unlawful for Alcoa to submit to such a limitation upon its production. It is of course true that a patentee may not use his patent as a sanction for extending his monopoly beyond its terms; the cases cited by the plaintiff support that proposition. Standard Sanitary Manufacturing Co. v. United States, 226 U.S. 20, 33 S.Ct. 9, 57 L.Ed. 107; National Harrow Co. v. Hench, 3 Cir., 83 F. 36, 39 L.R.A. 299; Blount Manufacturing Co. v. Yale & Towne Manufacturing Co., C.C.Mass., 166 F. 555; United States v. New Departure Co., D.C., 204 F. 107. Moreover, the agreement offered an inducement to Alcoa to limit its general production of pistons, since it would in this way avoid any royalties to Bohn. We will not say that that was not an unlawful extension of the Bohn company's monopoly, and conceivably if that company were a party to this action, we might enjoin further performance of the contract; though we could not do so in the absence of the patentee. However, the agreement was made in 1927, and any patent which it covered has now expired, and with it, of necessity, the contract. It might still be argued that Alcoa ought to be enjoined from entering into any other such arrangement; but the point has become trivial to the last degree and appears to be raised for the first time in this appeal. We refuse to consider it. Helvering v. Wood, 309 U.S. 344, 60 S.Ct. 551, 84 L.Ed. 796. Finally, the plaintiff charges that in 1929 Alcoa and Aluminum Industries  one of the original three sublicensees of the pooled patents  agreed, as one of the considerations for its license, that the sublicensee should buy its ingot from Alcoa. The theory here is that this was part of Alcoa's effort to monopolize the ingot industry. This would be an unlawful practice, if proved; but the judge decided that no such agreement had been made, and the evidence certainly admitted that conclusion. We find nothing in Alcoa's dealing with the piston patents which demands any change in the judgment. This concludes all that we think it necessary to say about Alcoa's supposed unlawful practices. We have omitted consideration of any supposed conspiracy with foreign producers to protect its domestic monopoly, because it will be more convenient to deal with this as part of the organization of Limited, and of Alcoa's use made of Limited both before and after 1931 when the Alliance was founded, as will appear. The plaintiff's position in general is that Alcoa was independently a party to such combinations until the advent of the Alliance: we do not understand, however, that it asserts that this continued thereafter, except in so far as Limited is to be understood as always acting as Alcoa's agent or affiliate.