Court Opinion

ID: 9419567
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:50:11.872122+00
Date Added: 2024-06-11T17:22:18.967045
License: Public Domain

Mr. Justice Rutledge,
dissenting in part.
With Mr. Justice Black, in whose opinion I join, I concur in the Court's judgment to the extent that it sustains the District Court's findings and decree. But, with two exceptions, I dissent from the more important revisions made in the decree.
In anti-trust injunction suits the court’s function is twofold, to determine liability and to fashion the remedy to fit the fault. Perhaps in some cases the two things may be treated substantially independently. More often they are so interwoven that separation becomes impossible, if other than warped justice is done. This case is of the latter sort. But the Court’s modifications largely disregard this fact.
The story involves a quarter of a century of Sherman Act violation.1 Necessarily it has been sketched here only in outline. The bare bones of the history show, as rarely has been done, the combination’s expanding scope, the corresponding growth of design, the varied, but often devious and ruthless methods, as well as the ultimate total *439success of this long adventure in monopoly and unlawful restraint of trade.2 Without the color supplied by detail, however, the excursion’s true character is hardly half revealed. The full effect cannot now be given. It appears in the District Court’s careful and restrained opinion, 46 F. Supp. 541, buttressed in every conclusion, nearly every page, from writings accumulated, while the combination grew, in the files of the principal participants,3 and in other published documents.4
*440This emphasis upon the complete picture, in color and detail, is pertinent to liability. It bears even more directly on the quantity and character of relief required to uproot the combination’s destructive and unlawful effects. Without this view, many of the decree’s provisions, cast in dry legal terms, denuded of the life and history which brought them forth, seem drastic. With it, they take a wholly different aspect.
One may start, with the Court, upon the basic idea that, in such a proceeding, the decree’s function is not to impose sheer “punishment” for past misconduct, but is rather to devise effective measures to prevent its repetition and dissipate its consequences. This does not mean, however, that there is any clear, sharp line which can be drawn on the crux of past and future between punishment and prevention or dissipation; or that this difference should be translated into the implicit assumptions which seem to underlie the Court’s extensive revisions of the decree and thereby strip it in great part of effectiveness. The assumptions relate to the respective functions of trial and appellate courts in framing the decree as well as to the criteria by which are to be gauged the quantity and quality of relief needed to be effective.
It seems to be implied from the number, character and detail of the revisions that it is the business of this Court to rewrite the decree, substituting its own judgment for that of the District Court when there is difference concerning the wisdom or need of a particular revision. A supporting notion, apparently, is that the “equity” procedure to enforce the Act is hedged with the same limitations non-statutory equity has placed about its action as a system of private remedial litigation. Both these ideas have backing in a third misconception, that men who have misused their property, and acquired much of it, by violating the Sherman Act, are free for the future to continue using it as are other owners who have committed no such *441offense; and that consequently the appropriate relief affecting such use is the least restriction which possibly will prevent repetition of past violations. Cf., however, United States v. Union Pacific R. Co., 226 U. S. 470, 477. Except upon these assumptions, the Court’s major revisions of the decree cannot be justified.
Shortly, in my view it is not this Court’s business to fashion or rewrite the decree. Where the trial court, with obvious care and judgment, has devised measures it deems essential to protect the public interest and we agree they may be sufficient, our modifications by watering them down should stop with directions to eliminate provisions contrary to law or those we can say amount to an abuse of discretion. United States v. Crescent Amusement Co., 323 U. S. 173, 185. Changes imposing greater restrictions should be made only when the decree is insufficient to accomplish the protection required. Ibid. The reasons which thus ordinarily restrict the scope of appellate review have magnified force in anti-trust proceedings. Their complex character usually requires, as in this case, months or years for the trial court’s consideration. With its maximum attention, this Court cannot possibly attain the same detailed familiarity with the cause. Nor can it frame at long distance, with the same assurance, a decree adequate for the necessity.
The so-called equitable character of the proceeding does not nullify this inherent limitation upon appellate judicial action. Nor does it justify an attitude which would circumscribe the suit or the relief with the limitations courts of equity traditionally have put around their action in private litigation. The anti-trust injunction suit is in form “a proceeding in equity.” In substance, it is a public prosecution, with civil rather than criminal sanctions, for vindication of public right and for redress and prevention of public injury. To regard the fashioning of appropriate relief in such a suit as identical with the same *442function in private litigation is to disregard at once the former’s statutory origin, its public character, and the public interest it protects. The equitable garb of the proceeding therefore does not determine or conceal its true character. Nor does it limit the required relief merely to what will prevent repetition of the illegal conduct by which the combination has been formed, its property acquired, and its dominating position secured.
The contrary view ignores the momentum inherent in such a combination. The power, and much of the property, now aggregated in the combination’s hands and those of its principal participants, was gathered by unlawful methods, at the expense of the public and competitors.5 Presumably neither power nor property could have been accumulated by lawful means. Nor can they now together be transferred legally to another. The loosened restrictions of this Court’s revision may be sufficient to prevent, for the future, further acts of the character and having the effects of the past violations. But the pool has acquired more than 800 patents, which control the industry, of which Hartford alone holds more than 600. Its members, including Hartford, are not compelled to disgorge any of these, or prohibited to acquire others. *443Many of the patents, and certainly the cherished "patent position,” 6 were secured only by virtue of the illegal conduct. Whatever benefits may flow from these patents and the patent position thus created are inevitably the consequences of that conduct.7 Merely to throw off the illegal practices, such as restricted and discriminatory licensing, cannot reach those consequences. Every dollar hereafter, as well as heretofore, secured from licenses on the patents illegally aggregated in the combination’s hands is money to which the participants are not entitled by virtue of the patent laws or others. It is the immediate product of the conspiracy. To permit these patents to remain in the guilty hands, as sources of continuing lucrative revenue, not only does not deprive their owners of the fruit of their misconduct. Rather it secures to them its continued benefits. The pool may no longer utilize illegal methods. It, and the constituent members, will continue to enjoy the preferred competitive position *444which their conduct has given them and to use both that position and the ill-gotten patents, together with the patent position, to derive trade advantage over rivals and gain from the public which the patent laws of themselves never contemplated and the anti-trust laws, in my opinion, forbid.8
These considerations were before the District Court’s mind when it devised the decree. Concluding its opinion, that court made a “statement of the principles to be followed” in framing the decree which throws light particularly upon its considered views of the relief required. It stated, with undisputed evidence9 to sustain its conclusion:
“The court believes that no half-way measures will suffice. There has been a deliberate violation of the law, and it is the duty of the court to do what he can to make certain that these violations of the law will cease and will not be resumed in the future and that competition will be restored in the industry. The record discloses that some of the individual defendants anticipated legal action by the Government, and went ahead in spite of that and violated the law. They also tried to anticipate the remedies that might be applied and did what they could to forestall the effect of such remedies and retain the bene *445fits of their unlawful actions. The court intends to make certain that this does not occur.”10 (P. 620.)
The Government had requested the dissolution of Hartford, keystone of the combination.11 In view of controlling authorities relating to violations not less extensive or more clearly proved,12 it hardly could be said, and this Court’s opinion does not say, that if dissolution of Hartford had been ordered, this would have constituted an abuse of discretion. The District Court did not deny that remedy. Rather it reserved the question for later determination, undertaking meanwhile a milder remedy. In its own words, referring to the Government’s request for dissolution, the opinion stated:
“The court, however, is first going to make an attempt to avoid that, if it is possible to do so and at the same time restore competition to the industry. If this cannot be worked out to the satisfaction of the court, dissolution will be ordered.” (Emphasis added.)
“The first step to be taken is the immediate appointment of a receiver or receivers of Hartford. The court is going to deny any stay from the appointment of such receivers. It is believed to be absolutely necessary that the receivers take over the management of Hartford forthwith.” (P. 620.)
Among the reasons assigned for this action were, first, important changes made by Hartford without the court’s *446knowledge during pendency of the suit, involving heavy financial obligations' of Hartford “for the advancement of the interests of the companies involved,” including the transfer of three important patents to Corning which the court felt was “for the obvious purpose of continuing Coming’s monopolies regardless of the outcome of this suit” ;13 second, to prevent any further abuse of the patent privileges of Hartford and any further violation of the law, since “under the circumstances disclosed by the evidence, the court feels that this can only be done through court officers”; and, third, to conserve the assets of Hartford and preserve the status quo. Pending appeal, therefore, and final determination of the cause, the receivers were directed to take over Hartford’s management, continue operation under its existing contracts and agreements for licensing and for leasing its machines, and to receive, set aside and earmark the funds received from licensees, holding them for return to the licensees if the court’s decree should be affirmed. Finally, the receivers were to remain in control “until the court is satisfied that the abuses and violations of the law have ceased, until the orders of the court have been carried out, and until the court is satisfied that there no longer remains a reasonable probability that these practices will be resumed. If, after the expiration of a reasonable time, it appears *447to the court that the steps he is now taking are insufficient to restore a free and competitive status to the industry, the receivers shall be ordered to submit a plan or plans for the dissolution of Hartford.” (P. 621.)
From this portion of the opinion it is perfectly clear that the District Court has made no final decision concerning the dissolution of Hartford, as it was and still is entitled to do; and that it regarded the receivership as a necessary alternative to granting that relief at once. No other conclusion can be drawn than that the court, if compelled to choose between dissolution and permitting Hartford then to continue under its own management, unhesitatingly would have decreed its dissolution. The court in so many words stated, with reasons to support its view, that Hartford’s management could not be trusted to carry out the terms of its decree, to refrain from further patent abuses and violations of the law, but on the contrary already had taken steps to circumvent, in part, whatever remedy might be imposed.14
Receiverships generally are to be avoided, if possible. But there are times when they remain essential. If in any circumstances they are so, it would seem to be in these. Yet this Court’s judgment directing termination declares, in the face of the District Court’s findings and the evidence which clearly sustains them, that the receivership, though useful to preserve the status quo pending, decision here, was “not necessary to the prescription of appropriate relief” and should be wound up, and that the business should be returned to Hartford. This is not merely a decision that the receivership was not justified “in the light of what is hereafter said as to the substantive provisions of the decree.” It is a substitution of this Court’s judgment for that of the District Court on the *448question of dissolution of Hartford, which it reserved, foreclosing it from decision. It is likewise a substitution of this Court’s judgment for that of the District Court on the question whether “the abuses and violations of the law have ceased,” also reserved for future decision, and whether the management of Hartford, in the face of the evidence and the findings, can be trusted now to carry out the terms of the decree or were worthy of that trust when the decree was entered. All this, in advance of determination of the facts, which this Court cannot ascertain, on which the decision of these questions must turn.
Such an invasion of the trial court’s function, it seems to me, perverts both that function and our own. If that court’s findings, justifying the receivership and the reservation of decision on dissolution, were contrary to the law or the evidence, that should be demonstrated and declared. If they constituted an abuse of judicial discretion, the nature and character of the abuse should be pointed out. If they were neither, this Court goes beyond its province by substituting its own long-distance judgment for the immediately informed view of the District Court and in precluding it from judgment, upon issues rightly to be determined by it, in the first instance, whatever the standard which governs review, and in the circumstances rightly reserved by it for future decision. The action of the District Court in appointing receivers should be affirmed and, upon remand of the cause, its power should be unfettered to retain them pending its finding of the conditions specified in its opinion and decree for restoring the business of its owners or, in the alternative, to decree dissolution of Hartford, within a reasonable time.
This Court’s more important revisions of the “permanent steps” taken by the District Court may be noticed shortly. The latter’s opinion declared (p. 621): “The *449most important question is with respect to the licensing and lease system now used by Hartford. The court believes that this is the greatest abuse. It is through the licensing and lease system that Hartford retains control over and dominates the industry.”15 The court stated its view that “there will be further abuses in the future as long as there is a semblance of that system remaining. It is the opinion of the court that this entire system must be abolished.” Accordingly it required for future distribution “outright sale at reasonable prices” in place of the leasing of machines, with that method’s obvious danger of repossession in case the lessee should fail to observe practices established by the lessors, tacitly or otherwise. The court also required the licensing, royalty free, of existing patents upon glassmaking machinery.
In my opinion both measures were fully justified by the findings and the evidence. The leasing of patented machinery or instruments lends itself particularly to the creation and maintenance of monopoly and to the extension of monopolistic effects far beyond the life and scope of the controlling patent or patents.16 The holder of a patent who observes the law is entitled to exercise his rights of ownership through lease as well as sale. When, however, he uses his patent right, by the device of leasing, to acquire a monopolistic position stronger than the patent allows, and on being called to halt is not compelled to dispose of the patent, he subjects himself to whatever *450measures are required to prevent continuance of the practice in the future and to uproot the illegal position and advantage he thus obtains. In my opinion the District Court’s finding that further abuses would continue, especially in view of the dangers inherent in the right of repossession, justified its prohibition of the further use of the leasing system.
The requirement of licensing of existing patents, royalty free, would present greater difficulty if the violation had not been so gross and so long continued. But because it was both, and because the evidence shows a long course of using patents and patent position illegally to acquire other patents and consolidate still stronger positions, it is impossible now to determine what patents members of the combination may have acquired illegally. The certainty is, however, that many were so acquired.17 Since the pool and its members are not required to dispose of the patents, any revenues now received by them from the existing patents are the result, and inevitably will continue to be the result, of the owners’ violation of the law. To permit the continued collection of royalties would be to perpetuate, for the lives of the patents, the illegal consequences of the violations. That the court is bound, in equity, and by the statute, not to do.
It is said, however, that the Government has not asked, in this suit, for cancellation of the existing patents and that this provision of the decree amounts to that. The defendants, it is true, cannot derive royalties from them under the terms of the decree, if they continue to distribute machinery and glassware in interstate commerce. If this is drastic, it is because the violation was drastic and there is no other way now, short of dissolution or cancellation, *451to cut off its continuing effects of disadvantage to the public and the industry or of benefit to the violators. The court, seeking to avoid dissolution, had the duty to apply a remedy equally adequate. United States v. Terminal Railroad Association, 224 U. S. 383, 409. It could not do this, if the pool were left a continuing source of revenue to the violators and of burden to the public. Accordingly it required the agreement for license, royalty free. Since cancellation was not required in terms, it does not follow merely from the royalty free provision that the effect will be the same or that the defendants will not have the benefit of other incidents of ownership which may be exercised without perpetuating the unlawful consequences of the past misuse, such as realizing the value of the patents by sale, made upon proper application with the court’s approval.18
This Court’s revisions of the decree in these respects load upon the industry and the consuming public continuing charges in favor of those who have violated both the anti-trust statutes and the patent laws, a burden which will not end until the last of the illegally aggregated patents has expired, if then. They both foreclose dissolution and forbid the only other remedies equally adequate. So to perpetuate the unlawful consequences of violation will not discourage, it can only encourage setting the law at naught.
From what has been said it follows, of course, that the court properly impounded Hartford’s revenues from leasing and licensing arrangements and that these should now be returned to the sources whence received. Again, *452contrary to the Court’s implicit assumption, the mere fact that during this period there were no new violations does not mean there were not continuing effects of former ones.
The modifications made in paragraph 29, relating to restrictive licensing, should not go beyond restricting the paragraph to glass products and glass machinery, as the Government now concedes should be done. The provisions of the decree concerning the “fencing” and “blocking” of patents should stand, in view of the proven abuses in applying for patents merely to prevent others from obtaining them. Other revisions are too numerous to mention specifically, except two. I concur in the elimination of the individual defendants, Collins, Fulton, Fisher, and Dilworth, from the restrictions of the decree, for the reasons stated in the Court’s opinion. I concur also in the modification which requires the dissolution of the Glass Container Association, since the terms of the decree substantially accomplish this and the District Court expressly found the association had been “a breeding place for many of the illegal practices established herein.”
The case presents again the fundamental problem of accommodating the provisions of the patent laws to those of the anti-trust statutes. Basically these are opposed in policy, the one granting rights of monopoly, the other forbidding monopolistic activities. The patent legislation presents a special case, the anti-trust legislation the nation’s general policy. Whether the one or the other is wise is not for us to determine. But their accommodation is one we must make, within the limits allowed to the judicial function, when the issue is presented.
The general policy has been to restrict the right of the patent-holder rigidly within the terms of his grant and, when he overreaches its boundary, to deny him the usual protections of the holder of property. That this ordi*453narily has been done in infringement suits19 or suits for cancellation does not qualify the fact or the policy. On the other hand, the anti-trust statutes have received a broad construction and corresponding enforcement, where violation has been clearly shown. When the patent-holder so far overreaches his privilege as to intrude upon the rights of others and the public protected by the antitrust legislation, and does this in such a way that he cannot further exercise the privilege without also trespassing upon the rights thus protected, either his right or the other person’s, and the public right, must give way. It is wholly incongruous in such circumstances to say that the privilege of the trespasser shall be preserved and the rights of all others which he has transgressed shall continue to give way to the consequences of his wrongdoing.
This is substantially what the defendants have sought in this proceeding and this Court’s revision of the decree has granted in large measure. So inverted an idea of equity, or of the law, cannot stand. In a machine age, dominated so widely by patents, the effect can be no other than largely to nullify the anti-trust laws. There may be instances in which a patent holder, guilty of violating those statutes, can so separate his violation and its continuing effects from further full exercise of his patent right that he may become entitled to a form of relief which will permit this. Unless we are to disregard entirely the findings and conclusions of the District Court, supported by overwhelming evidence, this is not such a case.
The Court’s major modifications, in my opinion, emasculate the decree.
Me. Justice Black joins in this dissent.

 The District Court found “. . . that there has not only been a violation of the anti-trust laws, beginning with the first agreement between Hartford and Empire in 1916, but I am convinced that this violation of the laws was as deliberate as any that I can find in a review of anti-trust cases.” 46 F. Supp. 541, 552-553. Hartford and Lynch were also found guilty of contracting in violation of the Clayton Act.

 Sixteen pages of the trial court’s opinion are given to a summary of manifestations of conscious guilt. The instance cited in the opinion of Mr. Justice Black is illustrative. See also text infra at note 10. The methods employed ranged from suggestions for “cooperation” to the division of fields within the industry and the squeeze-out of rivals, ruthlessly and constantly through the system of licensing and leasing which the court found was “the greatest abuse.” Cf. text infra at note 15. Hazel-Atlas was a hold-out until the "three-way partnership” agreement of 1932. The long story showing how that company finally was brought “within the family” is particularly interesting in disclosing the methods used in bringing a rival to book.

 Characterizing the ease as “primarily documentary,” though also noting the “reticence of some of the key witnesses to disclose what plainly was within their knowledge as principal actors in the main conferences that occurred over a period of time,” the court stated: “. . . in this case, the men who planned and directed the proceedings under scrutiny, from 1916 down to the time of the filing of the complaint herein, left behind them numerous exchanges of letters and many memoranda executed contemporaneously with the happening of the main events and designed for the information of their contemporaries, their boards of directors, or for their successors in office. It is hard to imagine a case in which a court would have more firsthand information of what the parties did and intended than in the case at bar.” (P.553.)

 See the reports of the Temporary National Economic Committee, the disclosures of which were largely responsible for the institution of this proceeding. Investigation of Concentration of Economic Power, Sen. Doc. No. 95, 76th Cong., 1st Sess. (1939); ibid., Sen. Doc. No. 35, 77th Cong., 1st Sess. (1941); ibid., Monograph No. 31, Hamilton, Patents and Free Enterprise, 76th Cong., 3d Sess., Senate Committee Print (1941).

 Referring to the defendants’ argument “that the price of glassware to the consumer has not increased,” the District Court’s opinion stated (p. 620): “But again this is not a good defense if there have been violations of the law. Moreover, the history of the ease shows the great extent to which automatic machinery has come into use within the past forty years. It is natural to assume that the cost of production would decrease with the great influx of automatic machinery. Evidently the defendants managed to retain this saving in the cost of production by means of the conspiracy herein, which is manifested by the large profits in the industry. The benefits certainly were not passed on to the public.” Previously the court had found that, “Dominance over the entire industry is today so complete that at any time within the choice of Hartford and Owens prices to the consumer of glassware may arbitrarily be raised beyond all reason.” (P. 619.)

 Illustrative of the combination’s purpose in this respect is Levis’ report to Owens’ board of directors in November, 1929: “Our negotiations with Hartford-Empire Company and others, so far as our patent situation and royalty income is [sic] concerned, should be to attempt to secure a position whereby we pay no royalty on any item we produce and we attempt to have all others pay royalty on every item they produce, we participating with any one else in the royalties they receive.”

 With reference to the contention that the amendments made by the defendants in their contract relations, without the court’s knowledge, between the filing of the complaint in 1939 and the closing of testimony over two years later, the court said: “Men cannot, by illegal means, erect an illegal structure — a structure of dominance and control over an industry vital to the welfare of the public — and then, by destroying the illegal means by which the structure has been erected, take the position that they have reformed, that they have adopted a new course of conduct, and that they should go on their way unmolested by the law — as long as the illegal structure and its adverse effects upon the public remain.” (P. 618.)

 Cf. notes 13 and 17 infra.

 Throughout the litigation the facts have been substantially undisputed in consequence of the documentary and conclusive character of the proofs. Cf. note 3 supra. The dispute has been primarily over the inferences to be drawn from the facts, the defendants contending, in the words of the District Court (p. 615), that “any control that may exist over the production and marketing of unpatented glassware is but the result of a normal exercise of the patent privilege,” with like contention, of course, concerning the production and licensing of glassmaking machinery. The contention merely poses the basic question of law in the case.

 Cf. notes 2 and 13.

 Unless, in fact, this were Coming, which since 1922 has owned, or controlled, 43 per cent of Hartford’s stock. According to the District Court, Corning “in practical effect had sufficient control over Hartford to dictate the policies of Hartford in accordance with Coming’s wishes.” (P. 557.)

 Standard Oil Co. v. United States, 221 U. S. 1; United States v. American Tobacco Co., 221 U. S. 106.

 The trial court’s conclusions concerning these changes, cf. text infra at note 14, may be considered in the light of the other evidence showing consciousness of violation, with anticipation of remedial action, cf. note 2 supra, and of practices by which domination obtained under patents was maintained after they had expired, e. g., Hartford’s refusal to license others than Corning to make heat-resistant ware and oven ware on its feeders after Coming’s patents on glass composition for these wares had expired in 1936. (P. 556.) Cf. also Owens’ continued domination of the suction field, noted in this Court’s opinion, by use of improvement patents after its basic patent had expired.

 Cf. note 13 supra.

 Cf. note 2 supra.

 Cf. the statement, in 1922, of V. M. Dorsey to A. D. Falck, of Corning: “F. G. Smith, in private, suggested to me the most revolutionary theory, which he will no doubt talk to you about, viz., putting out the feeders very much like telephones are installed, that is, with an installation charge with a flat royalty plus royalties on production above a given amount. I think it has much to be commended. It would certainly put the pirates out of business quickly.”

 Cf. note 7 supra, and the instances cited from Exhibit 76 in the District Court’s opinion, 46 F. Supp. 541, 604-606, which caused it to raise the question why criminal prosecution had not been instituted.

 Even a disposition so guarded would realize for the owner the fruit of his wrongdoing in the ease of patents illegally acquired and integrated in the pool. But it would terminate the continuing benefit to him and the possibility of his further misusing the patent to the public harm.

 Cf. Morton Salt Co. v. Suppiger Co., 314 U. S. 488; Mercoid Corp. V. Mid-Continent Investment Co., 320 U. S. 661.