Court Opinion

ID: 9703765
Source: CourtListenerOpinion
Date Created: 2023-08-26 00:07:14.841831+00
Date Added: 2024-06-11T18:21:51.577999
License: Public Domain

BLAND, Judge
(dissenting).
In my view, it makes little difference whether or not paragraph 46(a) of the complaint is stricken, but the implication drawn from the striking of it requires that I briefly express my views in dissenting.
The Sherman Anti-Trust Law forbids illegal combinations or monopolies which restrain interstate trade. It is well-settled that an inventor or his assignee has the right to a monopoly in the manufacture and sale of his patented article. United States v. General Electric Co. et al., 1926, 272 U.S. 476, 47 S.Ct. 192, 71 L.Ed. 362. However, such a monopoly has been declared to be a “limited monopoly.” Oxford Varnish Corporation et al. v. Ault & Wiborg Corporation, 6 Cir., 1936, 83 F.2d 764; see also Bement v. National Harrow Co., 1902, 186 U.S. 70, 91, 22 S.Ct. 747, 46 L.Ed. 1058. Thus it is seen that when Congress passed the Sherman Act, we had two conflicting laws on the subject of monopoly. It is the duty of the courts, if possible, to harmonize the two statutes in such a way as to give force and effect to both and arrive at the true intent of Congress in the enactment of the antitrust law.
*904As I understand it, the chief reliance of the defendants in support of their contention that the Government in this case has no right, through its Department of Justice, to attack the validity of a patent, is upon United States v. American Bell Telephone Company, 1897, 167 U.S. 224, 17 S.Ct. 809, 820, 42 L.Ed. 144. The holding in that case, as pertinent to the inquiry here, is in the following language:
“Suits may be maintained by the Government in its own courts to set aside one of its patents not only when it has a proprietary and pecuniary interest in the assault, but also when it is necessary in order to enable it to discharge its obligations to the public, and sometimes when the purpose and effect are simply to enforce the rights of an individual. In the former cases it has all the privileges and rights of a sovereign. The statutes of limitation do not run against it. The laches of its own officials does not debar its right. Van Brocklin v. Tennessee, 117 U.S. 151 [6 S.Ct. 670, 29 L.Ed. 845]; United States v. Nashville, Chattanooga &c. Railway, 118 U.S. 120 [6 S.Ct. 1006, 30 L.Ed. 81]; United States v. Insley, 130 U.S. 263 [9 S.Ct. 485, 32 L.Ed. 968]. But when it has no proprietary or pecuniary result in the setting aside of the patent; is not seeking to discharge its obligations to the public; when it has brought the suit simply to help an individual; making itself, as it were, the instrument by which the right of that individual against the patentee can be established, then it becomes subject to the rules governing like suits between private litigants. * * * ” [Italics mine.]
This case is not authority for a holding that the Government in the instant action, when acting for the public through the Department of Justice, being duly empowered 'by Congress to enforce the antitrust laws as against what it alleges is a combination built around certain invalid patents, is estopped from challenging the validity of said patents. On the contrary, the mandate of the Sherman Act is that, under the direction of the Attorney General by appropriate officers, proceedings shall be instituted to remedy the wrongs brought about by a violation of the Sherman Act. The statute calls into action and authorizes proceedings in which it may be determined whether the Sherman Act is being violated or “valid patent rights” are being exercised.
The exact question presented here has never been directly presented before as far as I know; and since I am convinced that there must be some new declaration of law made by our highest court as to where the line of demarcation rests between the exercise of valid patent rights and acts that are in violation of the anti-trust laws, I feel that such cases as Sola Electric Co. v. Jefferson Electric Co., 1942, 317 U.S. 173, 63 S.Ct. 172, 174, should be given more consideration than has been accorded them by the majority. In that case (a royalty suit) the defendant-licensee was, under the decisions, when the case came to the Supreme Court, barred from pleading the invalidity of the patent, but it pleaded that the agreement was in violation of the antitrust laws and that therefore it had a right to say that the agreement was unlawful if the patent was invalid. The Supreme Court upheld this contention and stated:
“Local rules of estoppel which would fasten upon the public as well as the petitioner the burden of an agreement in violation of the Sherman Act must yield to the Act’s declaration that such agreements are unlawful, and to the public policy of the Act which in the public interest precludes the enforcement of such unlawful agreements. * * * ”
It also stated:
“ * * * We granted certiorari * * * the question being of importance to the administration of the patent laws and the Sherman Anti-Trust Act.”
As a basis for my conclusion, I rely also upon the following authorities: Morton Salt Co. v. G. S. Suppiger Co., 1942, 314 U.S. 488, 62 S.Ct. 402, 86 L.Ed. 363; United States v. Univis Lens Co., Inc., et al., 1942, 316 U.S. 241, 62 S.Ct. 1088, 86 L.Ed. 1408; United States v. Masonite Corporation et al., 1942, 316 U.S. 265, 62 S.Ct. 1070, 86 L.Ed. 1461; and Becher v. Contoure Laboratories, Inc., et al., 1929, 279 U.S. 388, 49 S.Ct. 356, 357, 73 L.Ed. 752. In the last-cited case the following is found:
“ * * * Again, even if the logical conclusion from the establishing of Oppenheimer’s claim is that Becher’s patent is void, that is not the effect of the judgment. Establishing a fact and giving a specific effect to it by judgment are quite distinct. A judgment in rem binds all the world, but the facts on which it necessarily proceeds are not established against all the world, Manson v. Williams, 213 U.S. 453, *905455 [29 S.Ct. 519, 53 L.Ed. 869], and conversely establishing the facts is not equivalent to a judgment in rem.
“That decrees validating or invalidating patents belong to the Courts of the United States does not give sacrosanctity to the facts that may be conclusive upon the question in issue. A fact is not prevented from being proved in any case in which it is material, by the suggestion that if it is true an important patent is void — and, although there is language here and there that seems to suggest it, we can see no ground for giving less effect to proof of such a fact than to any other. * * * ”
The last-cited authority is important in view of my conclusion that the fact of invalidity is pertinent to the issue here involved aside from the the question of the declaration of a patent’s invalidity. The invalidity of defendants’ patents, if any of them are invalid, is of concern here only in so far as it goes to the determination of the right of defendants to rely upon a patent monopoly for acts which would otherwise, admittedly, be contrary to the Sherman Act.
When the Department of Justice attempts to take action against a monopoly, it frequently occurs that the defendants contend that they have a right to have a monopoly and to restrain trade because their conduct is nothing more than the exercise of their rights under the patent laws. So, defendants file an answer, as they did in the instant case, showing that they rely upon the ownership of “valid patents” as an excuse for their contracts of price-fixing and trade-restraining. When such a defense is interposed, it is my view that, whether or not the Government has pleaded that the patents are invalid and regardless of the fact that they are to be regarded as prima facie valid, the Government has the right to show, if it can, that the patents relied upon are either invalid (concerning which the defendants would probably have more knowledge than anyone else) or are of such character in their relation to the prior art as to be no justification for violating the Sherman Act.
It seems to me that any other conclusion is anomolous. Can a defendant say, “Yes, I would be violating the Sherman Act if I were not acting under my valid patent rights,” and then close the mouth of the Government to show that the patents are such as to be no justification for such a violation? In attacking the validity of the patents, as the Government seeks to do in the instant case, it is not attempting to establish invalidity for the purpose of cancellation or for the purpose of protecting any other inventor or anyone who wishes to manufacture defendants’ products. It is attempting to show, in “discharge of its obligations to the public” under statutory mandate, the nature of the patents for the purpose of showing that they are no justification for the alleged monopoly and restraint of trade, whether valid or invalid.
In this view, it seems to me that the decisions relied upon by the majority are no authority for holding that the Government, under such circumstances, has no right to question the validity of the patents for the purposes stated. The result of the ascertainment of invalidity in the instant case is not the result sought in any decided case relied upon by the majority. It is the fact of invalidity which goes to the question as to whether or not the defendants in the instant case are using the patents as a smoke-screen (and I am not implying that they are) in order to carry on what the Government charges is a violation of the law.
If the striking of paragraph 46(a), which alleges that the patents relied upon are invalid, implies that the court does not have the right to accept evidence as to the nature of the patents relied upon, even though it shows them to be invalid, I think the striking would be erroneous. If the paragraph is stricken because it is unnecessary, or if the evidence of invalidity could be accepted for other purposes, then it is of little consequence what happens to paragraph 46(a).
I need not here discuss the broader aspect of the question as to whether or not the General Electric case (which, unlike the instant case, involved the conduct of principal and agent) should be modified where competitors and not bona fide agents are concerned, in the light of the present trend of decisions, and as to whether a valid patent monopoly should be held not to be one which encompasses the scope contained in the allegations of the Government. I have matured no view on this phase of the case.
For reasons hereinbefore stated, I feel compelled to dissent from the conclusion reached by the majority on the motion to strike and for partial judgment.