Court Opinion

ID: 9652942
Source: CourtListenerOpinion
Date Created: 2023-08-23 17:35:49.178913+00
Date Added: 2024-06-11T18:12:55.388614
License: Public Domain

BLAND, Associate Judge
(dissenting).
I must respectfully dissent from the conclusion reached and the reasoning employed by my associates. The case is of such vast importance, in respects which I will later point out, that I feel compelled to explain, at some length, why I think the decision is wholly unsound.
Section 337 (a), Tariff Act of 1930 (19 USCA § 1337 (a), reads:
*836“See. 337. Unfair practices in import trade.
/'(a) Unfair methods of competition declared unlawful. Unfair methods of competition and unfair acts in the importation of articles into the United States, or in their sale by the owner, importer, consignee, or ¿gent of either, the effect or tendency of which is to destroy or substantially injure an industry, efficiently and economically operated, in the United States, or to prevent the establishment of such an industry, or to restrain or monopolize trade and commerce in the United States, are hereby declared unlawful, and when found by the President to exist shall be dealt with, in addition to any other provisions of law, as hereinafter provided.”
I wish first to state, as briefly as possible, my understanding of what the majority opinion holds, and the expressed reasons which prompt such a holding.
There are a number of things in the opinion which need not have been recited or emphasized, but in its present form it does reaffirm the correctness of this court’s conclusion in Frischer & Co., Inc., et al., v. Bakelite Corporation et al., 39 F.(2d) 247, 267, 17 C. C. P. A. (Customs) 494, T. D. 43964; In re Orion Co., 71 F.(2d). 458, 22 C. C. P. A. (Customs) -, T. D. 47123; and In re Northern Pigment Co. et al., 71 F.(2d) 447, 22 C. C. P. A. (Customs) —, T. D. 47124, in so far as those cases held or suggested th¿t the importation into this country of a patented article, regardless of the intent of the importer, or the motives or lack of motives that prompted the importation, constituted unfair methods of competition and unfair acts in importation, but-that anything said in any of this court’s decisions which related to the importation of án article lawfully manufactured in a foreign country by the process of an American patent, which process patent could be protected here, was withdrawn from such decisions. It also holds, either expressly or by inference, that the importation of an article lawfully made abroad upon an American patented machine had the same status as the product of a process patent.
It will be noticed that in section 337 (a), supra, there are two things declared unlawful: (1) Unfair methods of competition and unfair acts in the importation of articles; (2) or “in their sale by the owner, importer, consignee, or agent of either, the effect or tendency of which is to destroy or substantially injure an industry, etc.” In the case at bar, the unfair act in importation, as well as the sale in this country of the article so imported, is involved.
The majority opinion in its present form does not accept many of the contentions made by the appellant and properly so, since it was not necessary to hold with appellant on these contentions in order to arrive at the conclusion reached by the majority. Now, if I understand the real basis of decision in the majority opinion, it is that there was no unfair method of competition or unfair act -in the importation or-sale of the apatite involved, shown by the record at bar, for the reason that the unfair competition and unfair act complained of does not “fall within the general domain of practices 'heretofore regard-éd as opposed to good morals because characterized by deception, bad faith, fraud or oppression, or as against public policy because of their dangerous tendency unduly to hinder competition or create monopoly.’ ” The majority opinion states: “ * * * It is then urged that the use in Russia of the processes of the United States patents involved was entirely lawful, and that in the act of importation itself there was no element or incident of unfairness, the importation being made openly and in entire accordance with the laws appertaining to such transactions.”
The majority then holds that - “the theory now advanced [by the appellant] is sound. * * * ”
It seems clear to me that the mere fact that the importation at bar was made in accordance with law (leaving section 337 (a), supra, out of consideration), and was made openly, is no justification for holding that such importation did not constitute an unfair act. The majority holds that the importation of a patented article, although lawful (again leaving section 337 (a) out of consideration) and open, is an unfair act. Leaving the statute at bar out' of consideration, it was lawful to import such an article although its sale in this country might be stopped in an infringement suit.
It seems to me to be far-fetched to hold that, because the sale of a product of a process cannot be held to be an infringement, it necessarily follows that it might not constitute an unfair method of competition '(in importation) or an unfair act in the importation of an article. The holding of •the majority is so broacl and far reaching that, in my judgment, it will bring about *837the complete nullification of the much needed legislation involved. It must be remembered that other obviously unfair acts in importation, not relating to patents, aimed at by the provision, will also necessarily fall under the rule which is laid down by the majority.
Congress was not content to use the same expression it used in the Federal Trade Commission Act (38 Stat. 717 et seq., title 15, § 41 et seq. U. S. C., 15 USCA § 41 et seq.), “unfair methods of competition.” It sought also to reach acts which by strict interpretation did not fall within that phrase, and it used the term “unfair methods of competition [in the importation] and unfair acts in the importation of articles.” Neither term was ever used before in any legislative enactment, and neither term has ever been defined by any court except this one. It is unthinkable that Congress intended to do what the majority says, in effect, it intended to do. It surely did not intend to give an additional remedy to those who already had a remedy and deny any remedy to the great majority of patent holders affected who had no existing remedy whatever.
That part of the report of the Senate Committee on Finance, quoted by the majority, states that the provision under consideration “is broad enough to prevent every type and form of unfair practice and is, therefore, a more adequate protection to American industry than any anti-dumping statute the country has ever had.” (Italics mine.) The term “unfair practice” is a broad one, broader than any similar term used in any statute except the one at bar, and one which the courts have not been called upon to construe or define. In my judgment, Congress, by section 337, intended to bring about the same or more far-reaching results, in the field of international commerce, than were accomplished by the Federal Trade Commission Act in the field of domestic trade.
It is well known that the products of patented processes and machines constitute a great majority of our internal and international commerce in goods which are dealt in under patent restrictions. The legislative history cited in the majority opinion indicates strongly that it was one of the purposes of the enactment to afford an additional and effective remedy to safeguard industries dependent upon patents. This the majority concedes. If the quotations from the legislative history in the majority opinion are made for the purpose of suggesting that Congress did not intend to include as an unfair act in importation the importation of the product of an American patent process, as distinguished from patented articles, they certainly fall far short of doing so.
In the explanation of the purpose of section 337, Tariff Act of 1930 (19 USCA § 1337), the Tariff Commission speaks of “infringements” and suits against certain dealers. The report of the House Committee on Ways and Means speaks of “violations.” The report evidently followed the suggestions of the Tariff Commission. The quoted information furnished by the Tariff Commission was not furnished to the Congress which first used the controverted term now at bar. The same language was used in the Tariff Act of 1922, and in the quoted statement by the Commission, according to the majority opinion (quoted from In re Orion Co., 71 F.(2d) 458, 22 C. C. P. A. (Customs) -, T. D. 47123), the Commission was explaining the necessity of a provision in the Tariff Act of 1930 similar to the one in the Tariff Act of 1922, but which would be enforced by embargo alone instead of levying higher duties. It calls attention to the Tariff Commission’s construction of the section, which construction it stated was then involved in an appeal to this court. That appeal referred to was the Frischer Case, supra, and in the Frischer Case, the Tariff Commission had definitely held that the importation into this country of an article (bakelite) made abroad, in accordance with the process of an American patent, was an unfair method of competition and an unfair act in the importation of an article. See finding No. 11 of the Tariff Commission in the Frischer Case. No attempt was made to get Congress, in the Tariff Act of 1930, to narrow the provision now under discussion, which was in the Tariff Act of 1922. So it is clear that when the Tariff Commission spoke of “infringements” and the committee spoke of “violations,” they could not have had in mind a matter involving the tenuous contentions of appellant, because of the Commission’s definite holding to the contrary. At the very most, the terms “infringements” and “violations” in the legislative history could not be regarded as even indicating more than the Tariff Commission’s interpretation (contrary to its holding in the Frischer Case, supra, and contrary to its holding, later, in the Northern Pigment Company Case, supra) of the meaning of *838the language which was found in both enactments. Surely, the Tariff Commission used those terms broadly. Congress did not use them at all. 'Are we warranted (even if this matter were in any sense controlling) in assuming that the Tariff Commission’ and the House Committee, in speaking of the two sections involved in the two acts, spoke with more precision than the Commission had employed in its written findings then on review, or this court employed in its expressions in the Frischer Case (which it now withdraws), and in later decided cases involving the application of the sections ?
If I concluded, as the majority has concluded, that Congress did not intend that the importation into thi's country of an article made by a process or upon a machine protected by an American patent in this country might be prohibited, if such importation and the sale of the article tended to destroy an American industry, I would be forced to the conclusion also that it never intended that' patent matters of any kind should be regarded as coming within this section at all. This is the real underlying view of appellant’s counsel, as was disclosed at the oral argument here. If I concluded as the majority has concluded, I would be forced to agree with the conclusion reached by the author of the majority opinion in his dissenting opinion in the Frischer Case,‘supra, in which he, after pointing out clearly many reasons for his conclusion, said: “I am unable to find where, in section 316, or in any other act which Congress ha”s ever passed, it evidenced any purpose to do such a thing as that, and, for that reason, I cannot agree with the majority that Congress in enacting the section had it in mind that alleged patent infringements should be dealt with under it. I feel that had it intended to do this, provision, in some way, would have been made for assuring a definite and legal finding upon any question of patent validity raised.”
The unsoundness of the conclusion reached by the majority and the untenable character of appellant’s argument is, I think, illustrated by the following found in appellant’s reply brief: “Appellees argue, on page 10, that if the importation and sale of a patented product is an unfair method of competition,- then they do not see why the importation and sale of an unpatented product, produced abroad by a process patented here, is not likewise an unfair method of competition. We are certain it is unnecessary to point out that the reason it is unfair in one case'and not in the other is that in the case of a patented product the patent rights of the patentee are being violated, while in the case of the unpatent-ed product the patent rights of the patentee are not being violated/’
Appellant states that the importation of a patented product violates the rights of the patentee, while the importation of the unpatented product does not -violate patent rights. The answer to this contention is very simple. The importation of the patented product does not violate anybody’s patent rights, and is, in every sense, lawful, unless made unlawful by the act under consideration.
It follows that there is absolutely no justification for distinguishing between article patents and process patents, and appellant’s frank admissions, in oral argument, in this case, amply support this view.
“Unfair competition” was a term involved in the Sherman Anti-Trust Act (26 Stat. 209, title 15, §§ 1-7, U. S. C. [15 USCA §§ 1-7, 15 note]) and the Clayton Act (38 Stat. 730, title 15, § 12 et seq. U. S. C. [15 USCA § 12 et seq.]), and its meaning had been defined by the courts. Congress then passed the Federal Trade Commission act, supra, containing the new term “unfair methods of competition”. Concerning the said three acts, the United States Supreme Court in Federal Trade Commission v. Raladam Co., 283 U. S. 643, 648, 51 S. Ct. 587, 590, 75 L. Ed. 1324, 79 A. L. R. 1191, said:
“The bill which wgs the foundation of the act, as it first passed the Senate, declared ‘unfair competition’ to be unlawful. Debate apparently convinced the sponsors of the legislation that these words, which had a well settled meaning at common law, were too narrow. When the bill came from conference between the two Houses, these words had been eliminated and the words ‘unfair methods of competition’ substituted. Undoubtedly the substituted phrase has a broader meaning, but how much broader has not been determined. It belongs to that class of phrases which does not admit of precise definition, but the meaning and application of which must be arrived at by what this Court elsewhere has called.‘the gradual process of judicial inclusion and exclusion.’ Davidson v. New Orleans, 96 U. S. 97, 104, 24 L. Ed. 616. The question is one for the final determination of the courts and not of the Commission. Fed*839eral Trade Comm. v. Gratz, 253 U. S. 421, 427, 40 S. Ct. 572, 64 L. Ed. 993; Federal Trade Comm. v. Beech-Nut Co., supra, 257 U. S. 441, page 453, 42 S. Ct. 150 [66 L. Ed. 307, 19 A. L. R. 882].
“The authority of the Commission to proceed, if that body believes that there has been or is being used any unfair method of competition in commerce, was then qualified in conference by the further requirement, not in the original bill, — ‘and if it shall appear to the commission that a proceeding by it in respect thereof would be to the interest of the public.’ By these additional words, protection to the public interest is made of paramount importance, but, nevertheless, they are not substantive words of jurisdiction, but complementary words of limitation upon the jurisdiction conferred by the language immediately preceding. Thus the Commission is called upon first to determine, as a necessary prerequisite to the issue of a complaint, whether there is reason to believe that a given person, partnership, or corporation has been or is using any unfair method of competition in commerce; and, that being determined in the affirmative, the Commission still may not proceed, unless it further appear that a proceeding would be to the interest of the public, and that such interest is specific and substantial. Federal Trade Comm. v. Klesner, 280 U. S. 19, 28, 50 S. Ct. 1, 74 L. Ed. 138, 68 A. L. R. 838. Unfair trade methods are not per se unfair methods of competition. [Note the last expression.]”
The court there pointed out that Congress by the use of the additional term “methods of” meant something more than similar terms had meant in the other two acts, and proceeded to give a meaning to the term.
It is well-settled law that we should hold that Congress, when it used the new, broad, and uninterpreted language in the controverted provision, meant more than it did by the use of similar but narrower terms in prior enactments. The majority has wholly failed to observe this most compelling requirement. The reasoning and result of the opinion lead to the opposite conclusion.
While the language used in the prior enactments referred to, including the Federal Trade Commission Act, is in no sense as broad as the language used -in the statute at bar, I think the holdings of the Supreme Court and other federal courts, hereinafter cited, compel the conclusion that the acts here complained of should be regarded as unfair acts within the meaning of the controverted provisions (and, as I see it, this is the only question necessary for decision here), and that in reviewing the Commission’s holding we should “hesitate to reject the conclusion of the Commission, based as it is upon clear, specific and comprehensive findings supported by evidence.” Federal Trade Commission v. Keppel & Bro., 291 U. S. 304, 54 S. Ct. 423, 427, 78 L. Ed. 814.
I desire to call attention to and briefly discuss the following cases: Federal Trade Commission v. Keppel & Bro., supra; Sears, Roebuck & Co. v. Federal Trade Commission (C. C. A.) 258 F. 307, 6 A. L. R. 358; Federal Trade Commission v. Winsted Hosiery Co., 258 U. S. 483, 42 S. Ct. 384, 66 L. Ed. 729; Federal Trade Commission v. Algoma Lumber Co., 291 U. S. 67, 54 S. Ct. 315, 320, 78 L. Ed. 655.
In the first case, the Supreme Court had, as one phase of the case, what I regard as the same question, in principle, which confronts us here, i. e., Did the Federal Trade Commission have the right to determine initially what constituted an “unfair method of competition?” After explaining that Congress, by the use of the “broader and more flexible phrase ‘unfair methods of competition’ ” meant more than to aim at the acts which had been defined by the courts as “unfair competition,” the court said:
“While’this Court has declared that it is for the courts to determine what practices or methods of competition are to be deemed unfair, Federal Trade Comm’n v. Gratz, supra [253 U. S. 421, 40 S. Ct. 572, 64 L. Ed. 993], in passing on that question the determination of the Commission is of weight. It was crfeated with the avowed purpose of lodging the administrative functions committed to it in ‘a body specially competent to deal with them by reason of information, experience and careful study of the business and economic conditions of the industry affected,’ and it was organized in such a manner, with respect to the length and expiration of the terms of office of its members, as would ‘give to them an opportunity to acquire the expertness in dealing with these special questions concerning industry that comes from experience.’ Report of Senate Committee on Interstate Commerce, No. 597, June 13, 1914, 63d Cong., 2d Sess., pp. 9, 11. See Federal Trade Comm’n v. Beech-Nut Packing Co., *840supra, 257 U. S. 441, at 453, 42 S. Ct. 150, 66 L. Ed. 307, 19 A. L. R. 882; compare Illinois Central R. Co. v. Interstate Commerce Comm’n, 206 U. S. 441, 454, 27 S. Ct. 700, 51 L. Ed. 1128. If the point were more doubtful than we think it, we should hesitate to reject the conclusion of the Commission, based as it is upon clear, specific and comprehensive findings supported by evidence.
' “We hold that the Commission correctly concluded that the practice was an unfair method of competition within the meaning of the statute. It is unnecessary to attempt a comprehensive definition of the unfair methods which are banned, even if it were possible to do so. We do not intimate either that the statute does not authorize the prohibition of other and hitherto unknown methods of competition or, on the other hand, that the Commission may prohibit every unethical competitive practice regardless of its particular character or consequences. New or different practices must be considered as they arise in the light of the circumstances in which they are employed.” (Italics mine.)
When '“new or different” acts in the importation of merchandise come befo're the Tariff Commission in accordance with the statute, it is its duty to determine whether or not they constitute “unfair methods of competition or unfair acts in the importation of articles.” This court will then, as a matter of law, if called upon, determine whether such acts are such as are made unlawful by the statute.
It has been suggested that if Congress had intended the importation of the product of a patented process to have constituted an unfair act, it would have specifically so provided in the act. The impracticability and inadvisability of making such an attempt on the part of Congress is clearly explained in the Sears, Roebuck & Co. Case, supra, and I will not attempt to quote from that opinion. Moreover, the Supreme Court discussed this subject-matter in Federal Trade Commission v. Keppel & Bro., supra, and cited and referred to a report of the Senate Committee on Interstate Commerce, made by it when it reported the Federal Trade Commission bill to the Senate. The report, in part, is as follows: “The committee gave careful consideration to the question as to whether it would attempt to define the many and variable unfair practices which prevail in commerce and to forbid their continuance or whether it would, by a general declaration condemning unfair practices, leave it to the commission to determine what practices were unfair. It concluded that the latter course would be the better, for the reason, as stated by one of the representatives of the Illinois Manufacturers’ Association, that there were too many unfair practices to define, and after writing 20 of them into the law it would be quite possible to invent others.”
See, also, Federal Trade Commission v. Beech-Nut Packing Co., 257 U. S. 441, 42 S. Ct. 150, 66 L. Ed. 307, 19 A. L. R. 882.
The Federal Trade Commission to-day subdivides the unfair acts of competition into sixteen subdivisions.
It is conceded in this case, except as is hereinbefore indicated, that the importation of a patented article, which if made here would infringe an American patent, or if sold here could be prevented, is an unfair act and that this is true whether the importer did it openly or otherwise, and that it is true, even if the importer did not know that the article was protected by patent in this country. The majority will agree that, notwithstanding his innocence and ignorance, he has acted unfairly, but holds that if he imported the product of an American process patent knowing at the time that in this country he would not be permitted to manufacture it, and knowing that the practice would destroy American industry, as was true in In re Northern Pigment Co. et al., supra, he has not committed an unfair act. The reason it is unfair for one to import a patented article protected by an American patent is because it puts the holder of the American patent at an unfair disadvantage and destroys the industry Congress was seeking to preserve, and the same reasons exactly apply to the importer of the product of an American process patent.
The books are full of cases which sustain the holding by the Federal Trade Commission that certain methods were unfair under the new language used in the Federal Trade Commission Act which could not have been held to be unfair under any prior statute or under the common law. What is or is not unfair under the new language used must depend largely upon what Congress sought to accomplish by the legislation.
In Federal Trade Commission v. Klesner, 280 U. S. 19, 50 S. Ct. 1, 74 L. Ed. 138, 68 A. L. R. 838, it was definitely held that the Federal Trade Commission *841Act was not intended as a means of enforcing private rights. So it is with the provisions at bar; private rights are not concerned. The existence and welfare of American industry are to be given- paramount importance.
To hold as the majority holds that the acts complained of here do not constitute unfair acts under the new language used, because the courts have not heretofore held them to be such, is unquestionably out of line with numerous Supreme Court and other federal court decisions, some of which I have hereinbefore cited and discussed.
Let us take the facts in Federal Trade Commission v. Keppel & Bro., supra. The Keppel firm was one of numerous candy-manufacturers who manufactured and sold what was known as “break and take” packages, in some of which packages a penny was placed, and the child purchasing this particular package would, therefore, get his candy free. The Supreme Court of the United States held that there was no deceit and that there was no fraud, and that other candy dealers could do the same thing and protect themselves, but that notwithstanding these facts it amounted to an unfair method of competition under the new language used in the Federal Trade Commission Act. On the very question which is the controlling one here, the court said:
“Although the method of competition adopted by respondent induces children, too young to be capable of exercising an intelligent judgment of the transaction, to purchase an article less desirable in point of quality or quantity than that offered at a comparable price in the straight goods package, we may take it that it does not involve any fraud or deception. It would seem also that competing manufacturers can adopt the break and take device at any time and thus maintain their competitive position. From these premises respondent argues that the practice is beyond the reach of the Commission because it does not fall within any of the classes which this Court has held subject to the Commission’s prohibition. See Federal Trade Comm’n v. Gratz, 253 U. S. 421, 427, 40 S. Ct. 572, 64 L. Ed. 993; Federal Trade Comm’n v. Beech-Nut Packing Co., 257 U. S. 441, 453, 42 S. Ct. 150, 66 L. Ed. 307, 19 A. L. R. 882; Federal Trade Comm’n v. Raladam Co., 283 U. S. 643, 652, 51 S. Ct. 587, 75 L. Ed. 1324, 79 A. L. R. 1191; Federal Trade Comm’n v. Royal Milling Co., supra, at page 217 of 288 U. S., 53 S. Ct. 335, 77 L. Ed. 706. But we cannot say that the Commission’s jurisdiction extends only to those types of practices which happen to have been litigated before this Court.
“Neither the language nor the history of the act suggests that Congress intended to confine the forbidden methods to fixed and unyielding categories. The common law afforded a definition of unfair competition and, before the enactment of the Federal Trade Commission Act [see 15 USCA §§ 41-51] the Sherman Anti-Trust Act (15 USCA §§ 1-7, 15 note) had laid its inhibition upon combinations to restrain or monopolize interstate commerce which the courts had construed to include restraints upon competition in interstate commerce. It would not have been a difficult feat of draftsmanship to have restricted the operation of the Trade Commission Act to those methods of competition in interstate commerce which are forbidden at common law or which are likely to grow into violations of the Sherman Act, if that had been the purpose of the legislation.”
Fraud, deception, intentional wrongdoing, or damage flowing therefrom, need not be shown, even under the narrower Federal Trade Commission practice, which relates only to competition. Federal Trade Commission v. Algoma Lumber Co., supra; Federal Trade Commission v. Winsted Hosiery Co., supra. In the Algoma Lumber Co. Case, supra, where California pine was sold as white pine and the trade generally understood that California pine was not the regular white pine, it was said:
“The Commission made no finding as to the motives animating the respondents in the choice of the contested name. The respondents say it was chosen to distinguish their variety of yellow pine from the harder yellow pines native to the southern states-We may assume that this is so. The fact remains, however, that the pines were not white either botanically or commercially, though the opportunity for confusion may have been comparatively slight when the sales were restricted to customers in local markets, buying for home consumption. Complaints, if there were any, must have been few and inarticulate at a time when there was no supervisory body to hold business to its duty. According to the law as then adjudged, many competitive practices that today may be suppressed (Federal Trade Comm’n v. Winsted Hosiery Co., su*842pra), were not actionable wrongs, the damage- to the complainants being classified often as, collateral and remote. American Washboard Co. v. Saginaw Mfg. Co. (C. C. A.) 103 F. 281, 286, 50 L. R. A. 609. * * * (Italics mine.)
“Competition may be unfair within the meaning; of this statute and within the scope .of the .discretionary powers conferred-on the Commission, though the practice condemned does not amount to fraud as understood in courts of law. Indeed there is a kind of fraud, as courts of equity have long perceived, in clinging to a benefit which is the product.of misrepresentation, however innocently made. Redgrave v. Hurd, L. R. 20 Ch. D. 1, 12, 13; Rawlins v. Wickham, 3 De C. & J. 304, 317; Hammond v. Pennock, 61 N. Y. 145, 152. That is the respondents’ plight to-day, no matter what their motives may have been when they began. They must extricate themselves from it by purging their business methods of a capacity to deceive.”
So, ¡it does not make any difference in the case at bar whether the importer had knowledge-or did anything knowingly which was unfair when his conduct alone is considered, but the question Is presented: Does the .importation so made result in an unfairness to the American industry which Congress-sought to protect?
In Federal Trade Commission v. Winsted Hosiery Co., supra, the respondent sold to retailers and jobbers, and used thé .term “merino”' as ■ applied to underwear which was not all wool; The retailer and the jobber understood and were not deceived.. The manufacturer, did. not intend,.to deceive any one, and did not deceive any one, and yet, largely, on account of the consideration existing in the case that the manufacturer was putting into the hands of the retailer and the jobber a matter which enabled them to unfairly increase their own sales, it was held that the whole situation presented an unfair method of competition.
The Winsted Hosiery Co. Case is strictly in point on the issues at bar. The innocent importer (and it is not claimed that the importer is innocent in the instant case) puts into the hands of the competitors of appellees the instrument to take away their trade not only by underselling them but by truthfully stating that it is the same merchandise, and that it is made by the same process as appellees. The remedy provided for in the statute at bar is not against an individual because of any unfair conduct on his part, but is against the goods, because of the unfairness which the American industry will suffer as a result of Amtorg manufacturing something in Russia and selling it here, which it could not manufacture here and sell.
Surely, what the Supreme' Court, in these cases, said with reference to the effect of the addition of the term “methods of” in the Federal Trade Commission Act, applies with much more force to the language here under consideration. The term used in section 337 (a), 19 ÚSCA § 1337 (a) is not only unusually broad, but is in a field of legislative endeavor never before entered. This proceeding is in the nature of an action against property (in rem) as distinguished from equity actions in the cited cases which were actions in personam. In the light of the Keppel & Bro. Case, supra, and the other cases discussed, can there be any reasonable doubt as to what the Supreme Court would have held if it had been called upon to decide the Northern Pigment Company Case, supra, or the case at bar?
I will not dwell upon a discussion of who the Amtorg Trading Corporation is, or how it operates for the Soviet government of Russia. All those things are matters which are pretty generally understood and have little, if any, real bearing on the issues here involved. It is admitted in this case, so far as we are concerned, that the phosphates, apatite, etc., are made in Russia, in accordance with the processes of the American patents involved, and that if one attempted to produce the same goods by the same processes in this country, the owners, or licensees of the patents could siop such production as an infringement; that the acts complained of have the effect or tendency of substantially injuring or de¡-stroying an American industry which is efficiently and . economically operated; and that the phosphate rock from Russia was delivered at Baltimore for $6 a ton, which was $1.57 a ton below the average cost of phosphate rock delivered at that port from the- mines in Florida. Some of the complainants are lessees of the owners of the patents and necessarily have to pay high .royalties under their, leases, which fact hlone unduly handicaps -such American producers when unfairly thrown into competition with a product made by such processes without the royalty expenditure. Is it fair to ■ tie American; industry with patent restraints and then" permit the free importation of the same product,, produced by the *843same process, under the circumstances at bar, and thus destroy the American industry? More precisely, is it a fair act in importation for a foreign-controlled company to destroy an American industry by importation and sale when it could not do so legally by manufacture and sale here? Since the Supreme Court holds that legally selling a penny with a piece of candy, without fraud or deceit, is an unfair method of competition in trade, why should this court not sustain the Tariff Commission in its holding that the acts complained of were unfair methods of importation and unfair acts in the importation of apatite?
It must be remembered that it is conceded in this case, and properly so, not only by the majority, but by the parties, that if the holding in the Northern Pigment Company Case was sound, it controls the decision in this case, and that the facts in this case and the facts in the Northern Pigment Company Case cannot be distinguished in principle. Notwithstanding this fact, it may be suggested that the record at bar does not show such an extreme case of unfairness as was shown in the Northern Pigment Company Case. In that case, it was shown that Americans who had been engaged in the manufacture of pigment in the United States, and employed by a company operating under the American patent quit their employment and went to nearby Canada where they could operate under the process without paying royalty, and that they there manufactured and caused to be shipped to this country pigments which could be sold at such a price as to wholly destroy the American industry if such unfair acts were continued. ,We there held that the importation into this country of pigments, so made, fell within the term used in said section 337. If this was true in the Northern Pigment Company Case, where they knowingly damaged the American industry, it must also be an unfair act if the importer of the goods, so produced, did not know how they were produced. In other words, Congress could not have distinguished between importers who knew of the facts and those who did not. The effect upon the American industry was the same, and, regardless of the knowledge of the importer, the industry which Congress sought to protect would suffer the same disadvantages in either instance. If we were, in cases like the one at bar, required to make a distinction between an importer who knew all the facts relating to processes and one who did not know them, we would also be required to make the same holding in cases like the Frischer Case, where article patent claims were involved. The purpose of the law would be evaded by the transfer of goods to so-called innocent purchasers, and perjury and fraud would be encouraged. But, regardless of this consideration, no one has ever said, or ever will say, that the acts complained of in the Northern Pigment Company Case were not in fact unfair or that the importers in that case were innocent purchasers who had no knowledge of how the pigment was made.
The majority opinion in holding that the acts complained of here and in the Northern Pigment Company Case were not unfair seems to rest upon the proposition that no decided cases hold that súch acts-constitute unfairness. It is pertinent here to note that there is no decision cited, and I am sure that there can be none cited,, which holds that acts such as the one at bar are not unfair and that there is, therefore, a lack of supporting authority for the majority opinion.
In the opinion, however, attention is called to the fact that appellant in its brief points out that in 1852 a bill was introduced in the United States Senate which would have made illegal the importation of the product of a patented process or the product of a patented machine, and that the bill was discussed by various Senators, but was never enacted into law. The majority then points out that no legislation of similar character has ever since been enacted into law.
Because of the unusualness in resorting to this kind of matter as proper for consideration in the decision of a case, and because of its apparent immateriality, I have examined the cited references and others relating thereto with some care. Such a bill was introduced in the Senate, and, in explaining it, it was said that the patentee of a machine for making wooden shoe lasts, then used largely in New England, was be-1 ing deprived of his patent reward by the importation from Canada, nearby, of such. lasts made in Canada on the patented machine. An amendment was offered to confine the prohibition of the imported articles to those made of wood. This was discussed and rejected. The bill passed the Senate on the 8th day of February, 1853. I find no record of the bill ever being reported in the House, and since that term of Congress adjourned on the 3d of March, *8441853, it is not difficult to understand why the measure did not become a law. In view ■of the particular evil aimed at, many intervening circumstances could have happened which would have rendered the passage of the law unnecessary. But if by any stretch of the imagination it can be concluded that that Congress deliberately decided against the general policy of prevention by law of the importation of a product of a patented process, or a patented machine, it is difficult to understand why that would throw any light whatever upon the question as to whether Congress, when it enacted the provision under consideration, did or did not intend that the term used should be authority for the prevention of importations'such as are at bar.
Notwithstanding what is said by the majority with reference to this court’s consideration, in prior cases, of the differences between process claims and article claims in patents as affects the issue here, an examination of appellant’s brief in the Northern Pigment Company Case, supra, discloses that it was there definitely pointed out that a remedy^was afforded in infringement suits where" article claims were involved which was not afforded where process claims were involved. It is true that the authorities cited here were not cited there, and "that this point was not stressed in that case, like it is in the case at bar. The question was, however, argued before and decided by the Tariff Commission in the Frischer Case, supra, and on appeal here it was discussed in appellant’s brief, and some of the authorities cited in the instant case were there cited.
The issue presented here by appellant is not new. It has been before this court in the Frischer Case and in the Northern Pigment Company Case. Obviously, it was not there regarded as' of sufficient importance to give it any consideration, let alone controlling consideration.
If the majority means to hold, and I am not sure that it does, that the acts complained of are not unfair because the importer himself is not shown to have knowingly done the unfair thing, to. a particular individual or an industry, such a holding would not only take from the operation of section 337 (a), supra, all. patent matters, but would bring about the complete nullification of the whole provision. It must be remembered that there are many other unfair acts in importation aimed at by the provision. It is common knowledge that the simulation by foreign manufacturers of unpatented and untrade-marked American produced packages and articles is a matter of the gravest concern in our international commerce to-day. Under the holding of the majority, would it be unfair for an innocent purchaser to buy an attractive package in Japan, which simulated an American package, not knowing what kind of similar packages were sold in America, and import it into this .country ? Could that practice be stopped at the ports under section 337? Not if we are to judge the unfairness by the mental attitude of the importer. But it certainly would be unfair to the American producer of similar goods to permit such a practice, and I think it is clearly within the intent of the provision.
Let us suppose, after this court’s opinion in this case is handed down, that the Federal Trade Commission should issue an .order against the Amtorg Company, to desist selling the apatite at bar on the theory that it was embraced within the term “unfair methods of competition.” In the light of the above cases, and if the unfairness was the only consideration, is there any doubt as to what it would hold and would be justified in holding? If it is unfair to sell it (although it could not be stopped by an infringement action because the sale does not infringe anything), would it also be unfair to import it ? Let us keep in mind that Congress sought to protect the American industry by stopping such transactions at.the port of entry and thus avoid multiplicity of actions and vain attempts with inadequate remedies.
The majority opinion says: "If some of the suggestions which have been offered during consideration of this case were carried to their- logical conclusion, it would seem to follow that, the importation of any merchandise the cost of which to the importer was lower than the price he would have to pay for a similar or competitive article produced in the United States would constitute an unfair method of competition within the purview of section 337, supra.”
The finding of the Commission that the acts complained of were within the controverted provision would clearly lead to no such unjustifiable conclusion as is above indicated. Congress, in many places in the act, has recognized the existence of such a situation and has attempted to take care of it by levying a duty which, at least theoretically, equalizes the costs of production. Congress also made, special provision for *845this subject-matter in the flexible tariff provision in the act. By section 337 (a), 19 USCA § 1337, Congress was not aiming at lower production costs unless such costs involved an element of unfairness, such as clearly appears from the record in this case and in the other cited cases of this court involving section 337 (a).
I do not contend for any construction of section 337 (a) that ignores the word “unfair,” but I do most earnestly insist that, in determining what is unfair under the new, broad language used, we must not lose sight of the expressed purpose of the act —to save American industries. We should unhesitatingly hold that an evasion of our patent laws by manufacturing abroad what could not be manufactured here is unfair to American industries which are tied by patent restrictions.
The findings of the Commission which are here involved should be affirmed.