Court Opinion

ID: 9643653
Source: CourtListenerOpinion
Date Created: 2023-08-22 20:36:34.356775+00
Date Added: 2024-06-11T18:11:02.138283
License: Public Domain

GOODRICH, Circuit Judge
(dissenting in part).
The problem in connection with this case which troubles me is that which concerns the alleged illegality of the arrangements by which Thompson, under the arrangements with Johnson-March Corporation, sells bituminous emulsion at a price which includes, on a per gallon basis, the royalty fee. The purchaser who buys at the end of the Barber-Johnson-March-Thompson route pays the price of x cents per gallon for the emulsion, plus 2$ royalty fee. The purchaser who buys elsewhere pays x cents per gallon for emulsion and must pay a royalty fee of 1$ per square yard for surface covered by this gallon of emulsion. The question is whether this constitutes an illegal type of arrangement so as to bring this state of facts within the rule of the Carbice Corporation case1 as applied in the Leitch Manufacturing Co. case.2
I agree with my colleagues that a contractor is “faced with an elusive and indefinite factor in estimating his costs when he bids upon a job”. But these indefinite factors mentioned, the skill of the operator, temperature, humidity, etc., are equally present whether a contractor pays royalty in terms of a price per gallon or in terms of a price per square yard of spread. This point seems to me to be clear.
Now, does the method of paying royalty on the per gallon basis give the one who purchases that way an advantage over another who purchases on the per yard royalty basis? If so, it may well be that we have here forbidden practice. My difficulty comes in seeing how any advantage arises. Suppose a road contractor limits the spread of a gallon of emulsion to eight square yards as we are told the New Jersey rules require. On that basis the royalty price figured by the “spread” of the emulsion would be 8^ per gallon. A purchaser certainly can know with fair certainty whether it is more advantageous to buy from a Thompson competitor and pay the royalty himself or whether to buy from Thompson and have the royalty included in the price per gallon. It appears that petroleum emulsion is an article easily bought from several sources in the open market. The determination of where to purchase seems to me to be wholly a matter of intelligent guessing plus arithmetic on the part of the purchaser. The element of uncertainty in the guessing with its consequent effect upon expenditure for petroleum emulsion seems to me to be a problem equally applicable to purchasers from Thompson as from any other seller of petroleum emulsion.
While I agree with the majority opinion upon the question of the invalidity of the patent I am unable to see, with regard to the counterclaim, how the marketing practice involves a transgression of the rule of law announced in the Carbice case.

 288 U.S. 27, 51 S.Ct. 334, 75 L.Ed. 819.

 302 U.S. 458, 58 S.Ct. 288, 82 L.Ed. 371.