Opinion ID: 1547286
Heading Depth: 1
Heading Rank: 1

Heading: Invalidity of License.

Text: One important issue urged here is that this license is invalid as a violation of the Clayton Anti-Trust Act § 3 (15 USCA § 14). The basis of this contention is that the wringer and gear mechanism covered by the patents and the license are for attachments to power-operated washing machines, which are not covered by patents; that such attachments are necessary to salability of such washing machines; that to limit, through license, the use of the patented device to a particular kind of washing machine, thus preventing its use upon other and more desirable types of washing machines which are manufactured by appellant, has the effect of giving appellee a monopoly over unpatented articles through the device of such character of license. It may be conceded that the evidence establishes that it is difficult, if not impractical, to dispose of power-operated washing machines without the wringer and gearing attachments covered by these patents. Also, that there are various types of washing machines, and that a limitation of license to a less desirable and salable washing machine would seriously hamper, if it did not practically prevent, competition with a more desirable and a more salable machine, and that this lessening of competition would have a tendency to create a monopoly. Also, that these patents cover only the wringer and gearing mechanism, and have no reference to the washing machines themselves. These concessions, however, fall short of establishing a situation which invalidates this license. It is well established that the essence of a patent is monopoly in the subject-matter of the patent. E. Bement & Sons v. National Harrow Co., 186 U. S. 70, 91, 22 S. Ct. 747, 46 L. Ed. 1058. The sole incentive offered by the patent laws to encourage development in the arts and sciences is the right to this monopoly for a given term of years. It is not against such kind of monopoly that the anti-trust laws are aimed or to which they have any application. It is true, however, that it is possible for a patentee to so employ the force of this legitimate monopoly, through a license, through sales of the patented article, or otherwise, as to effect another and additional monopoly unrelated to that accorded by the patent. When this is done, such license, sales, or other device is unlawful. In declaring the rule of law applicable to this latter situation the Supreme Court has said that the patentee may grant a license upon any condition the performance of which is reasonably within the reward which the patentee by the grant of the patent is entitled to secure. United States v. General Elec. Co., 272 U. S. 476, 489, 47 S. Ct. 192, 196, 71 L. Ed. 362. Therefore, the question here is whether the condition of this license (that the patented matters should be used only in connection with a particular type of washing machine) is reasonably within the reward of monopoly granted by the patent. Obviously, there was no obligation on the patentees to grant any license whatsoever. If the situation in the washing machine business was such that there would be no commercial demand for washing machines without these patented attachments, the natural and legitimate result flowing from the monopoly of these attachments would be a monopoly of the washing machine business, although the machines themselves were entirely unpatented. This is a situation brought about by the excellence of the patent in a commercial sense, and not by any arrangement, contract, or other act of the patentee than the bare ownership of the patent and the monopoly of use of the subject-matter covered thereby. If this be the situation of the evidence, the only effect of granting a license to use the patented attachments would be one beneficial to the licensee, since it would enable him to continue in a business where he could not commercially remain without the license. Obviously, the patentee is not compelled to choose between granting full and complete use under the patent or granting no use. He may attach such limitations upon the use as do not go beyond the influence of his complete monopoly without granting licenses. Under the situation here, it is clear that this limitation in the license to use of the patented attachments to certain types of washing machines is well within the monopoly of the patent. The very fact that appellant insists on going outside of the license, and testifies (through its president) that it would have to go out of business unless it did, is convincing that the commercial situation is such that the monopoly of these patented attachments has the practical effect of a monopoly of the power driven washing machine business. None of appellant's rights are invaded by this limitation, since it may cease using the patented device and manufacture any character of washing machines it desires with any other wringer and gearing attachments or with no such attachments. As to it, the difficult situation is one naturally resulting. It has no standing of itself to claim a right to use the patented device. Nor is the public harmed by this limitation, because the patentee is entitled to all the benefits naturally flowing from the monopoly of his patent and, under the commercial situation here shown, a natural benefit of this monopoly is its extension to the entire machine. This limitation in the license is well within the language and the intent of the rule as quoted above from the Supreme Court.