Court Opinion

ID: 9420121
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:53:01.991537+00
Date Added: 2024-06-11T17:22:22.526791
License: Public Domain

Mr. Justice Douglas,
with whom
Mr. Justice Black, Mr. Justice Murphy and Mr. Justice Rutledge join, concurring.
While I have joined in the opinion of the Court, its discussion of the problem is for me not adequate for a full understanding of the basic issue presented. My view comes to this — it is a part of practical wisdom and good law not to permit United States v. General Electric Co., *316272 U. S. 476, to govern this situation, though if its premise be accepted, logic might make its application to this case wholly defensible. But I would be rid of United States v. General Electric Co. My reasons for overruling it start with the Constitution itself.
The Constitution grants Congress the power “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Art. I, § 8, Cl. 8. It is to be noted first that all that is secured to inventors is “the exclusive right” to their inventions; and second that the reward to inventors is wholly secondary, the aim and purpose of patent statutes being limited by the Constitution to the promotion of the progress of science and useful arts. United States v. Masonite Corp., 316 U. S. 265, 278 and cases cited.
Congress, faithful to that standard, has granted pat-entees only the “exclusive right to make, use, and vend the invention or discovery.” Rev. Stat. § 4884,35 U. S. C. § 40. And as early as 1853 the Court, speaking through Chief Justice Taney, defined the narrow and limited monopoly granted under the statutes as follows: “The franchise which the patent grants, consists altogether in the right to exclude every one from making, using, or vending the thing patented, without the permission of the patentee.” Bloomer v. McQuewan, 14 How. 539, 549. But the ingenuity of man has conceived many ways to graft attractive private perquisites onto patents. The effort through the years has been to expand the narrow monopoly of the patent. The Court, however, has generally been faithful to the standard of the Constitution, has recognized that the public interest comes first and reward to inventors second, and has refused to let the self-interest of patentees come into the ascendency. As we stated in B. B. Chemical Co. v. Ellis, 314 U. S. 495, *317498, “The patent monopoly is not enlarged by reason of the fact that it would be more convenient to the pat-entee to have it so, or because he cannot avail himself of its benefits within the limits of the grant.” From Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U. S. 502, which overruled Henry v. A. B. Dick Co., 224 U. S. 1, to International Salt Co. v. United States, 332 U. S. 392, decided only the other day, the Court has quite consistently refused to allow the patentee’s “right to exclude” to be expanded into a right to license the patent on such conditions as the patentee might choose. For the power to attach conditions would enable the patentee to enlarge his monopoly by contract and evade the requirements of the general law applicable to all property. The philosophy of those decisions was summed up in Mercoid Corp. v. Mid-Continent Investment Co., 320 U. S. 661, 666, where we said:
“The necessities or convenience of the patentee do not justify any use of the monopoly of the patent to create another monopoly. The fact that the pat-entee has the power to refuse a license does not enable him to enlarge the monopoly of the patent by the expedient of attaching conditions to its use. . . . The patent is a privilege. But it is a privilege which is conditioned by a public purpose. It results from invention and is limited to the invention which it defines. When the patentee ties something else to his invention, he acts only by virtue of his right as the owner of property to make contracts concerning it and not otherwise. He then is subject to all the limitations upon that right which the general law imposes upon such contracts.”
The Court, however, allowed an exception in this long line of cases. In United States v. General Electric Co., supra, decided in 1926, it followed Bement v. National *318Harrow Co., 186 U. S. 70, decided in 1902, and sustained a price-fixing provision of a license to make and vend the patented invention. By that decision price-fixing combinations which are outlawed by the Sherman Act (United States v. Socony-Vacuum Oil Co., 310 U. S. 150) were held to be lawful when the property involved was a patent. By what authority was this done ?
The patent statutes do not sanction price-fixing combinations. They are indeed wholly silent about combinations. So far as relevant here, all they grant, as already noted, is the “exclusive right to make, use, and vend the invention or discovery.” Rev. Stat. § 4884, 35 U. S. C. § 40. There is no grant of power to combine with others to fix the price of patented products. Since the patent statutes are silent on the subject, it would seem that the validity of price-fixing combinations in this field would be governed by general law. And since the Sherman Act outlaws price-fixing combinations it would seem logical and in keeping with the public policy expressed in that legislation to apply its prohibitions to patents as well as to other property. The Court made an exception in the case of these price-fixing combinations in order to make the patent monopoly a more valuable one to the patentee. It was concerned with giving him as high a reward as possible. It reasoned that if the patentee could not control the price at which his licensees sold the patented article, they might undersell him; that a price-fixing combination would give him protection against that contingency and therefore was a reasonable device to secure him a pecuniary reward for his invention. Thus the General Electric case inverted Cl. 8 of Art. I, § 8 of the Constitution and made the inventor’s reward the prime rather than an incidental object of the patent system.
In that manner the Court saddled the economy with a vicious monopoly. In the first place, this form of *319price fixing underwrites the high-cost producer. By protecting him against competition from low-cost producers, it strengthens and enlarges his monopoly. It is said in reply that he, the patentee, has that monopoly anyway- — ■ that his exclusive right to make, use, and vend would give him the right to exclude others and manufacture the invention and market it at any price he chose. That is true. But what he gets by the price-fixing agreement with his competitors is much more than that. He then gets not a benefit inherent in the right of exclusion but a benefit which flows from suppression of competition by combination with his competitors. Then he gets the benefits of the production and marketing facilities of competitors without the risks of price competition. Cf. United States v. Masonite Corp., supra. In short, he and his associates get the benefits of a conspiracy or combination in restraint of competition. That is more than an “exclusive right” to an invention; it’s an “exclusive right” to form a combination with competitors to fix the prices of the products of invention. The patentee creates by that method a powerful inducement for the abandonment of competition, for the cessation of litigation concerning the validity of patents, for the acceptance of patents no matter how dubious, for the abandonment of research in the development of competing patents. Those who can get stabilized markets, assured margins, and freedom from price cutting will find a price-fixing license an attractive alternative to the more arduous methods of maintaining their competitive positions. Competition tends to become impaired not by reason of the public’s preference for the patented article but because of the preference of competitors for price fixing and for the increased profits which that method of doing business promises.
*320Price fixing in any form is perhaps the most powerful of all inducements for abandonment of competition. It offers security and stability; it eliminates much of the uncertainty of competitive practices; it promises high profits. It is therefore one of the most effective devices to regiment whole industries and exact a monopoly price from the public. The benefits of competition disappear. The prices charged by the regimented industry are determined not by representatives of the public, as in the case of electric, water, and gas rates, but by private parties who incline to charge all the traffic will bear. And the type of combination in this case has the power to inflict precisely the type of public injury which the Sherman Act condemns. This price-fixing scheme does far more than secure to inventors “the exclusive right” to their discoveries within the meaning of Cl. 8 of Art. I, •§ 8 of the Constitution. It gives them a leverage on the market which only a combination, not a patent by itself, can create. Yet it is “every” combination in restraint of trade which § 1 of the Sherman Act condemns, price-fixing combinations dealing with patents not excluded.
Congress has much to say as to the pattern of our economic organization. But I am not clear that Congress could expand “the exclusive right” specified in the Constitution into a right of inventors to utilize through a price-fixing combination the production and marketing facilities of competitors to protect their own high costs of production and eliminate or suppress competition. It is not apparent that any such restriction or condition promotes the progress of science and the useful arts. But however that may be, the Constitution places the rewards to inventors in a secondary role. It makes the public interest the primary concern in the patent system. To allow these price-fixing schemes is to reverse the order and place the rewards to inventors first and the public *321second. This is not the only way a patentee can receive a pecuniary reward for his invention. He can charge a royalty which has no relation to price fixing. Or he can manufacture and sell at such price as he may choose. Certainly if we read the patent statutes so as to harmonize them as closely as possible with the policy of anti-trust laws, we will strike down a combination which is not necessary to effectuate the purpose of the patent statutes. If we did that in this case we would overrule the General Electric Co. case.
This Court, not Congress, was the author of the doctrine followed in that case. The rule it sanctions is another of the private perquisites which the Court has written into the patent laws. See Special Equipment Co. v. Coe, 324 U. S. 370, 383. Since we created it, we should take the initiative in eliminating it. It is hard for me to square it with the standards which the Constitution has set for our patent system It plainly does violence to the competitive standards which Congress has written into the Sherman Act.