Document: 410 U.S. 52 93 S.Ct. 861 35 L.Ed.2d 104 UNITED STATES, Appellant,v.GLAXO GROUP LIMITED et al. No. 71—666. Argued Nov. 9, 1972. Decided Jan. 22, 1973. Syllabus Appellees, Imperial Chemical Industries Ltd. and Glaxo Group Ltd., British drug companies engaged in the manufacture sale of fungicide griseofulvin, pooled their bulk- dosage-form patents sublicensed certain firms United States to practice patents. The pooling agreement contained a covenant restrict bulk sales resales, sublicensing agreements prohibited resales third parties without licensors' prior consent. filed civil antitrust suit against appellees restrain alleged violations § 1 Sherman Act, Government also attacked validity patents, sought relief mandatory, nondiscriminatory bulk-form reasonable-royalty licensing District Court held that bulk-sales restrictions were per se enjoined future use, but refused Government's request order form appellees' as part relief. court entertain claim patent invalidity, since did not rely on defense claims. Held: 1. Where are directly involved presents substantial case for may challenge regardless whether owner relies defending action. Pp. 57—60. 2. In 'pry open competition' market closed by violations, an all bona fide applicants is appropriate relief, where, this case, manufacturer choose make sales, licensees bound court's mandatory further proper. 60—64. 328 F.Supp. 709, reversed; see 302 Daniel M. Friedman, Washington, D.C., appellant. Henry P. Sailer, appellee Group, Limited. Sigmund Timberg, Industries, Mr. Justice WHITE delivered opinion Court. appeals pursuant 2 Expediting amended, 62 Stat. 989, 15 U.S.C. 29, from portions decision Columbia suit. We asked decide illegal restraints trade, when defendants do upon conduct, erred refusing requested Government. * (ICI) (Glaxo), griseofulvin. Griseofulvin antibiotic compound be cut with inert ingredients administered orally capsules or tablets humans animals treatment external fungus infections. There no substitute griseofulvin combating itself unpatented unpatentable. ICI owns various dosage drug.1 method manufacturing form, well finely ground, 'microsize' drug.2 3 On April 26, 1960, entered into formal At time execution agreement, drug, Pursuant acquired right under Glaxo's sell sublicense was authorized ICI's As undertook 'not use its best endeavors prevent subsidiaries associates selling any independent party express consent writing.' 4 Subsequent granted American Home Products Corp. (AMHO), exclusive distributor States. agreed AMHO. AMHO process form. With respect stated: 'You (AMHO) will not, first obtaining our (ICI') consent, resell, redeliver supplies griseofulvin.' had previously similar two companies—Schering (Schering) Johnson & (J J). permit Affiliates writing.'3 5 March 4, 1968, Glaxo, 26 209, charged resale 1960 ICI—Glaxo agreements, unreasonable trade. challenged patent.4 6 Court, citing Court's v. Arnold, Schwinn Co., 388 U.S., 365, 87 1856, 18 1249 (1967), ICI-AMHO Act.5 (D.C.1969). Because affidavit disclaiming desire claims, struck claims invalidity complaint, ruling could it relied denied motion amend complaint allege griseofulvin.6 7 Subsequently, separate, unreported orders, Glaxo-J J, Glaxo-Schering, Glaxo-ICI found restrictions, 709 (D.C.1971). took direct appeal Act we noted probable jurisdiction. 405 914, 92 940, 30 784. II 8 major issue before us course prosecuting action only defense, which here. agree unduly narrow view controlling cases. 9 Bell Telephone 167 224, 17 809, 42 L.Ed. 144 (1897), acknowledged decisions permitting sue set aside fraud deceit associated issuance, federal courts should suits 'to invention mere ground error judgment officials,' at least where 'has proprietary pecuniary (interest) setting (and) seeking discharge obligations public . ..' 265, 269, S.Ct., 820, 822. Gypsum 333 364, 68 525, 746 (1948), referred holding 'without standing bring equity cancel invalidity,' id., 387, 538, went declare that, vindicate interest enjoining entitled attack justify anticompetitive conduct otherwise violative law. because free competition, repeatedly private licensee-plaintiff he licensed even though has so his license. authorities proposition Sola Electric Co. Jefferson 317 173, 63 172, 165 (1942); Edward Katzinger Chicago Metallic Mfg 329 394, 67 416, 91 374 (1947); MacGregor Westinghouse Mfg. 402, 421, 380 (1947). essence those cases revealed although licensee (under then-controlling law) normally foreclosed questioning privileged bar removed alleges patentee would laws, absent patent. lwas these circumstances 'federal must, interest, keep way utilized price-fixing .' 399, 419. much tradition Pope Gormully, 234, 12 632, 636, 36 414 (1892): 'It important competition repressed worthless really valuable protected monopoly .,' most recently echoed Lear, Inc. Adkins, 395 653, 663, 89 1902, 1908, 23 610 (1969). 10 think principle sufficient authority raise litigate ICI-Glaxo case. According record, issued licenses unreasonably restrained trade prohibiting reselling included impose such licensees. These charges sustained, concluding license provisions product market. 11 then faced pertinent demand licensing, latter being well-established forms necessary effective remedy, particularly have provided leverage contributed violation adjudicated. See example, Besser States, 343 444, 72 838, 96 1063 (1952); 340 76, 71 160, 95 (1950); International Salt 332 392, 12, 20 Hartford-Empire 323 386, 65 373, 322 (1945). Appellees opposed compulsory asserting 'deny essential ingredient rights system,' there warrant 'such drastic forfeiture rights.' context, necessarily dealing enforceability been appropriate, if appeared substantial, entertained arriving conclusion, recognize unlimited basing simple assertion invalid. Cf. Walker Process Equipment Food Machinery Corp., 382 86 347, 247 (1965). Nor invest Attorney General roving commission question lurking background But district jurisdiction brought and, found, fashion This often involves limit vested owners can complex difficult issue. litigation usually proceed assumption valid involved, basic challenged, perceive good reason, either terms system judicial administration, hear it. 13 therefore, striking allegations remand, consider microsize III 14 remains additional provide predicate consideration For purpose, said, need conclusive, enough undertaking what large inquiry, one easily obviate other questions remedy invalid which, invalidated, lend substance defendant's limited, necessity contributed. Here, presented sufficiently convincing wholly validity, ruled favorably licensing. place, clear evidence patent, along gave economic insist enforce imposed licensees.7 apparently considered restriction prerequisite granting sublicense, rejected draft because, among things, permitted indications, also, others than Schering J fears pressure allow sales. source patent-pooling simple: needed assure Pooling engage manufacture, exchange, little here intimately effectuating restraint 16 Secondly, required reasonable grant rates defendants' restraints.' 401, 17. consists three wholesalers, appellees, account nearly 100% totaling approximately eight million dollars. never sold practice, manufactured preferring instead purchase Glaxo. retail outlets virtually identical prices. effect refusal prohibition available sources reason licensees, now declared illegal, begin bulk. It self-interest maintain control dosage-form, wholesale competition-free. Bulk create new enabling convert outlets, presumably lead price reductions result normal competitive forces. is, fact, record market, they able purchases, substantially lower prices drug. Only requiring whole-sale become competitive. 19 Relief however, alone insure discontinue might fill needs course, action, mandatory-sales affect them. They economically less advantageous controlled proposed long purchasers, avoid requirement. Unless depend entirely willingness continue supply present recognized '(t)he framing decrees take place rather Appellate Courts' generally followed 'are invested discretion model judgments fit exigencies particular case.' supra, 400 17; accord, Ford Motor 562, 573, 1142, 1149, 31 492 (1972). treated power discretion, subject reversal gross abuse, 'an obligation intervene significant phase case' effective. 89, 169. Accordingly, ordered affirmative implement. e.g., purpose 'so far practicable, (to) cure ill effects freedom continuance.' Id., 88, Mandatory specified remedies. See, remedies 21 To extent indicated opinion, reversed. 22 So ordered. Judgment 24 REHNQUIST, whom STEWART BLACKMUN concur, dissenting. 25 undertaken Congress initiation novel procedures determination doing blandly disregarded procedural history neither statutory nor existence general individuals collaterally Patent 1970, citizens could, alleging fraudulent procurement, prompt show cause why letters repealed.1 A provision carried over 1793.2 1836 individual actions increased number defenses infringement actions.3 omission determined Mowry Whitney, Wall. 434, 858 (1872), preclusion fraudulently procured. 27 rationale Mowry, reasoned equitable cancellation procured writ scire facias accordingly, same limitations. dictum, 'The fraud, exists, practiced government, injured, assert seek relief.' 441. When later sued Alexander Graham subsequent several purported acts him Office, heavily dictum recognizing Federal obtained fraud: 28 'That both Constitution statutes law equity, find duty correct evil, recall get argument 128 315, 370, 90, 98, 32 450 (1888) (Bell I). 29 asserts breadth established 159 548, 69, 40 255 (1895) II), wherein upheld appellate There, Tel. (128 450), decided kind mistake accident, proper country, kingly prerogative, land inventions officers appointed who deceit, power, made mistakes instrument itself, proceedings patentee.' 555, 72. (1897) III), characterized above-quoted language 'general statement' again limited effect, saying: 'But, while thus rightfully affirmed government wrongfully invention, attempt define character mistake, must decree cancelling proof instrument, cancellation. Least intended sitting officials. That collateral exercise office, conferred. 821. 33 plain import confined traditional grounds deceit. makes arguments support position contends therefore limitations III. Alternatively, argues undercut decisions, including Gypsum, longer followed. 34 stated 'deliberate dicta' asserted defendant violations. '(i)n opportunity, afforded royalties, shield patentability does exist.' 386—388, 538. enunciate range authority, quite patentee, governmental Office sort described. doctrine, hand, sprang plaintiff laws up complaint. Since basis should, equally, essentially falls between grants authority. lack patentability, more, within qua mistake. And merits determine reasoning applicable. may, prevail blur distinction separate extend neither. 37 Certainly, true, states, favoring testing invalidation specious Blonder-Tongue Laboratories, University Illinois Foundation, 402 313, 343—344, 1434, 1450, 788 (1971); 657, 664, 1904, invalid, 'the parts return, clause subverted.' Singer 174, 197, 199—200, 83 1773, 1786, 823 (1963) (White, J., concurring). 38 Significant recognition given doctrines. Additional resides obtain judicially decreed consisted, part, misuse. (1945); Morton G. S. Suppiger 314 488, 363 (1942). majority authorizes whereby invalidate owned related factual claimed cannot regarded reasonably extension principles. more properly creature statute innovation. 39 Although purports giving commission, pointed facts submitted motions partial summary very vertical constituted doctrine.4 (1967). common patented patentable 41 authorizing bear relationship whatsoever found. relates states 'it licensees.' Ante, 60—61. statement undisputed accompanied restraint-of-alienation fact findings ultimate facts. precisely opposite: 'Plaintiff shown current practices adjudged methods circumvent resale. 713. 43 completely contrary finding saying clearly erroneous. Yet holding, refers, unverified While impressive batting average litigant, heretofore benefit having assertions counsel evidentiary weight upset made. Nothing Rules Civil Procedure exempts trial manner litigant. conclusion 'can griseofulvin,' ante, 62, reached departure settled usages review. 44 Similarly, until 1967, it, too, alienation early 1960's, plausible contention 'economic leverage' violations.5 Thus, scope extends happens patent-licensing contains different restraint. 45 congressional authorization vel non regard proved question, I affirm orders dissent. Specifically 2,900,204, August 18, 1959. embodies types claims—(1) curing diseases administering amount griseofulvin' them internally (2) capsule, tablet, pill containing 3,330,727, July 11, 1967. covers improved (finely 'microsize') marketable AMHO, Schering, purchased themselves performed processes n. contended 'method' portion disclose how failed specify 'effective amount' 112. argued covered cured, domain. §§ 100 101. concerning Testimony received; developed affidavits, exhibits, interrogatories accompanying motions. monopolize domain, disclosure, use. 100, 101, 102(a), 102(b). Court: 'We submit (United v.) (333 (1948)) understood broadly used furtherance program. importance scheme violate plain. was, according contentions, pool place; paid Without anyone secure pills stop him; points out, unpatented. bolsters effectiveness imposes griseofulvin: small company somehow manages despite designed else so, still suppress threat vindication unpatentable goods doubly important—for double impediment commerce—the conspiracy.' Government, throughout brief emphasizes violation. 'In like this, furthering allegedly unlawful practices; give enables situation laws.' 109. excellent review briefly summarized here, Cullen Vickers, Fraud Procurement Patent, Geo.Wash.L.Rev. 110 (1960). 318. 117. inaccurately sustained total defeats me Compulsory misuse cases, see, (1947), (1945), specifically abuse rights.

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