Legal Document

342 U.S. 371 72 Supreme Court Reporter 350 96 L.Ed. 417 UNITED STATESv.NEW WRINKLE, Inc., et al. Number 250. Decided Feb. 4, 1952. Argued Jan. 10, 11, Mr. Charles or Haw. Hawai‘i Reports KFH45 A2 Weston, Washington, D.C., for appellant. Atlantic Toulmin, Jr., Dayton, Ohio, appellee, New Wrinkle, Incorporated Justice REED delivered the opinion of Court. 1 This suit against and The Kay & Ess company was instituted in United States District Southern Ohio by as a civil proceeding under § 4 Sherman Act.1 Defendants are charged with having violated that law2 conspiring to fix uniform minimum prices eliminate competition throughout substantially all wrinkle finish industry3 means patent license agreements. Motions dismiss were filed defendants. defendant urged complaint failed state cause action. Defendant Wrinkle pressed sole contention: it not then never had been engaged interstate commerce could, therefore, be guilty violating Act. 2 Court, without opinion, thereafter entered separate judgments each dismissing reciting judgment motion 'well taken.' A petition appeal allowed, on October 8, 1951, probable jurisdiction noted direct pursuant conferred this Expediting Act February 1903. 15 Code KF62 29, Annotated KF65 U5 29. I. 3 In granting motions defendants, course, treated allegations true. substance charges prior during 1937, litigation named coconspirator, Chadeloid Chemical Co., regard certain patents covering manufacture enamels, varnishes paints. Each claimed controlled basic finish, contending other subservient its own. Negotiations 1937 resulted contract into November 2, 1937. made provision organization new corporation, Wrinkle. Both agreed accept stock exchange assignments their patents. Wrinkel grant licenses, incorporating agreements which fixed at licensed manufacturers might sell, industry, including Chadeloid. price-fixing schedules become operative until twelve principal producers finishes subscribed prescribed Pursuant arrangement, incorporated, rights transferred it. conjunction companies persons, defendants worked together induce makers licenses offer. These prospective licensees advised agreed-upon prices, terms conditions sale they assured like advice being given 'in order establish industry.' After May 7, 1938, when requisite leading manufacturing accepted price became operative. By September 1948, action, more than two hundred, all, held nearly identical ten-year extendable from required, among things, licensee observe sales products covered schedule discounts selling established licensor Upon thirty days' notice writing, alter any schedule, but such bind only if imposed same time upon licensees.4 Termination provisions required give three months' written allowed terminate remedy violation agreement within days after thereof licensor. 5-cent per gallon royalty payable sold used licensee, said reduced figure contained subsequent granted lower charge. 5 acting consent licensees, issued intervals 'License Rulings' giving detailed allowable permissible practices. requirements these 'Rulings' adhered licensees. Since an entire copy Rulings,' exhibit, is too bulky reprinting, filing illustrative, set out Appendix opinion. 381, 355. It precisely details makes rigid procedure variety minutely deemed II. 6 must admit above true, we need consider whether facts would appellees, Ess. 7 Appellee, differs manufacturer commodities solely holder owner patents, right making vending others. does license. urges abstention activities concentration licensing insulates activity prohibitions Persons exclusively appellee exempt because contracts functions laws. For contention commerce, reliance placed York Life insurance versus Deer Lodge County, 231 495, 34 167, 58 332, cases involving local incidents Shoe Machinery Corporation States.5 latter contention, understand argument correctly, asserts since owners may do so please merely personal services, services citing Apex Hosiery Leader, 310 469, 502, 60 982, 997, 84 1311, case holding strike unionize factory did violate 8 contentions leave consideration concerning alleged combination restraint trade. use essential part plan restrain trade, trade paints obviously character. control restraint. 9 We think beyond question purpose regulating distribution fixing subject Act, even though isolated act contracting wholly single state. Certainly Treton Potteries 1927, 273 392, 397, 47 377, 379, 71 700, reasonable unreasonable, has considered se Act.6 Likewise clear that, although execution 10 'If fact instruments marketing goods affecting reach commodities,—contracts which, themselves nevertheless restraint.'7 11 And commerce. Patents no protection activities, used, here, scheme restrain. cover situation Ess, alike 1. III. 12 Appellees argue further, however, principles General Electric 272 476, 192, 362, E. Bement Sons National Harrow 186 70, 22 747, 46 1058, here. examined detail recently draw discussion our conclusions here.8 patentee competitor make vend limitation patentee. When rule left stated above. 333 page 310, 68 562, 92 701. But pointed 'the possession valid exemption limits monopoly.' 308, 561. 'two patentees field (not) legally combine monopolies secure mutual benefits through contractual between patented devices.' 305, 559. Price cross-licensing barred monopoly. 13 On day Line Material decision, handed down Gypsum 364, 525, 746. based similar those here except also manufacturer. have section II patent-holding significance defense 'industry-wide agreements, knowledge adherence others, over methods bulletins, sufficient prima facie conspiracy.' 389, 539. remand, final judgment, affirmed Court.9 discussing case, unanimous saying 'gives support patentee, concert members issue industry completely regimented, production competitive unpatented suppressed, class distributors squeezed out, stabilized. * show constituting former competitors acted organize stabilize prices.' 33 pages 400—401, 544, 14 see material difference presented complaint. An arrangement holders pool result plainly below reversed. Reversed. 16 CLARK took decision case. APPENDIX. 17 NEW INC. Licensors Processes Finishes MINIMUM PRICE SCHEDULE NO. 18 (Announced June 1, 1947) EFFECTIVE JULY 1947 19 (Superseding Minimum Schedule revised December 12, 1946) 20 Part License Agreement Dated April 1938 21 following Finish Agreement, take effect July remain force further notice. WRINKLE FINISH CLEAR Gal. 1/2 Drum -100 $2.85 $2.70 $2.65 $2.60 23 +100 2.70 2.55 2.50 2.45 BLACK 24 3.40 3.25 3.20 3.10 25 3.05 2.95 ORDINARY COLORS 26 3.65 3.50 3.35 27 ORGANICS (see 3) 28 4.00 3.85 3.75 3.70 29 3.60 3.55 METALLICS 30 (Addition metallic Wrinkle) 31 32 event added pigmented Finish, plus $.25, will price. Reductions quantity shown shall apply quantities shipment. 35 concentrated form ingredients customer produce Licensee number gallons kind color can normally produced adding concentrate supplied Licensee. 36 Clear circumstances charging seller intends converting colored accordance hereby question. 37 Prices f.o.b. destination freight allowed. 38 cancellation orders return readjusted settlement according actual purchased retained. 39 Terms: net, 1% cash ten 40 bids, deduct discount. discount "Wrinkle Finish" actually paid 41 See (No. 2-A) Page Canadian Prices. 4: 'The several district courts invested prevent violations sections 1—7 title; duty attorneys States, respective districts, direction Attorney General, institute proceedings equity violations. Such way setting forth praying enjoined otherwise prohibited. parties complained duly notified court proceed, soon be, hearing determination case; pending before decree, temporary restraining prohibition just premises.' Id., 1: 'Every contract, trust otherwise, conspiracy, foreign nations, declared illegal: *.' '8. 'Wrinkle' finishes, known 'Crinkle,' 'Shrivel,' 'Sag,' 'Morocco,' designations, defined compounded materials applied dried, hard wrinkled surface metal material. '9. widely coverings surfaces typewriters, registers, motors, machines, many articles manufacture. They advantages smooth ordinary enamels varnishes: 'a. One coat purposes coats required; 'b. Surfaces prepared carefully receive small imperfections; 'c. original appearance wrinkle-finished maintained less cleaning polishing smooth-finished articles.' important section, reads, far proceeding, follows: '7. Licensor reserves Prices, Discounts, Selling Terms Licensee, Licensor, Licensees sell dispose included herein, modify, amend suspend and/or Schedule. announces matter policy cost raw labor reported Department Commerce Labor, hereunder, intent open lowest consistent profit manufacturer, Licensor. No Discounts nor modification amendment suspension binding unless Licensees.' 258 451, 465, 42 363, 368, 66 708. There said: 'It true mere lease machines itself commerce.' 287, 307, 550, 560, South-Eastern Underwriters Ass'n, 322 533, dissent 570, majority 546, 64 1162, 1182, 1183, 1169, 88 1440. Polish Alliance Labor Relations Board, 643, 647, 1196, 1509, Lorain Journal 143, 149, 181, 184. 701; 340 76, 160, 95 89. Compare copyrights Paramount Pictures, 334 131, 915, 922, 1260.

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