HARTFORD-EMPIRE CO. ET AL. v. UNITED STATES
No. 2
SUPREME COURT OF THE UNITED STATES
323 U.S. 386; 65 S. Ct. 373; 89 L. Ed. 322; 1945 U.S. LEXIS
2728; 64 U.S.P.Q. (BNA) 18; 1945 Trade Cas. (CCH) P57,319
November 15, 16, 17, 18, 1943, Argued
January 8, 1945, Decided
SUBSEQUENT HISTORY:
Reargued October 9, 10, 1944.
PRIOR HISTORY: APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES
FOR THE NORTHERN DISTRICT OF OHIO. *
* Together with No. 3, Corning Glass Works et al. v. United States; No. 4, Owens-Illinois
Glass Co. et al. v. United States; No. 5, Hazel-Atlas Glass Co. et al. v. United States; No. 6,
Thatcher Manufacturing Co. et al. v. United States; No. 7, Lynch Corporation et al. v. United
States; No. 8, Ball Brothers Co. et al. v. United States; No. 9, Glass Container Association of
America, Inc. et al. v. United States; No. 10, Collins v. United States; and No. 11, Fulton et al. v.
United States, also on appeals from the District Court of the United States for the Northern
District of Ohio.
APPEALS under the Expediting Act from a decree enjoining violations of the antitrust laws.
DISPOSITION: 46 F.Supp. 541, modified.
CASE SUMMARY
PROCEDURAL POSTURE: Petitioners, corporations and officers and directors of glassmaking
machinery and the glassware industry, challenged the judgment of the U.S. District Court for the
Northern District of Ohio, which held that they conspired to violate the Sherman and Clayton Act
by jointly agreeing to share patents and excluding third-party competitors from their industries.
OVERVIEW: Petitioners, corporations and officers and directors of glassmaking machinery and
the glassware industry, engaged in a tacit agreement to exclusively share and license their patents
with each other and not allow third-parties to make use of their patents. This agreement had the
practical effect of creating a monopoly within the glassmaking industry, whereby petitioners
virtually controlled the entire market. Respondent United States brought suit under the Sherman
Act and Clayton Act to have their agreement declared illegal and impose remedies, including
having petitioners lose their rights to their patents. The court held that the evidence properly
showed that petitioners had engaged in illegal antitrust behavior, so as to exclude third-parties
from competing in their industry. The court determined that antitrust law did not permit or grant
the court to fashion a remedy whereby petitioners lost their rights over the patents, since
Congress had not allowed this remedy. The court concluded by modifying the lower court's
remedial provision and excluded petitioner shareholders since they were not involved and did not
engage in the antitrust violations.
OUTCOME: The court affirmed and modified the decision of the lower court and held that
petitioners were in violation of the antitrust laws, but modified the lower court's remedial
measures and remanded for further proceedings.
CORE TERMS: patent, decree, machinery, license, glassware, manufacture, invention, royalty,
machine, glass, injunction, conspiracy, feeder, licensing, glassmaking, licensee, stock, antitrust
laws, licensed, lease, dissolution, modified, enjoin, anti-trust, infringement, manufacturer,
acquisition, container, covering, patented
CORE CONCEPTS -
Antitrust & Trade Law: Sherman Act
The Sherman Act provides criminal penalties for its violation, and authorizes the recovery of a
penal sum in addition to damages in a civil suit by one injured by violation. It also authorizes an
injunction to prevent continuing violations by those acting contrary to its proscriptions. The court
may not impose penalties in the guise of preventing future violations. The court may not create
new duties, prescription of which is the function of Congress, or place the defendants, for the
future, in a different class than other people, as the Government has suggested. The decree must
not be so vague as to put the whole conduct of the defendants' business at the peril of a summons
for contempt; enjoin all possible breaches of the law; or cause the defendants hereafter not to be
under the protection of the law of the land.
Patent Law: Inequitable Conduct: Antitrust Consequences Patent Law: Ownership & Transfer of
Rights: Patents as Property The lease of a patented machine is a lawful method of exercising the
exclusive patent right of practicing or using the invention, and that effective relief may be afforded
without destroying the inventor's property rights in the patents they own.
Antitrust & Trade Law: Intellectual Property: Bad Faith, Fraud & Nonuse Civil Procedure:
Injunctions: Permanent Injunctions
An injunction binding the corporate defendants, their officers, agents, and employees is sufficient
to constrain the individual defendants so long as they remain in official relation, and to bind their
successors. It is unnecessary to enjoin them personally, when that relation is severed.
Patent Law: Inequitable Conduct: Antitrust Consequences Patent Law: Ownership & Transfer of
Rights: Patents as Property A patent owner is not in the position of a quasi-trustee for the public
or under any obligation to see that the public acquires the free right to use the invention. He has
no obligation either to use it or to grant its use to others. If he discloses the invention in his
application so that it will come into the public domain at the end of the 17-year period of
exclusive right he has fulfilled the only obligation imposed by the statute.
LEXIS HEADNOTES - Classified to U.S. Digest Lawyers' Edition: [***HN1]
stockholders as parties to unlawful combination by corporations. --
Headnote:
Stockholders of corporations which have entered into a combination violative of the Federal
anti-trust laws are not, by reason of their stockholdings, parties to the combination and enjoinable
as such.
[***HN2]
sufficiency -- connection with combination in restraint of trade. --
Headnote:
Individuals charged in a bill for an injunction under the Federal anti-trust laws to have participated
in the direction and management of a corporation alleged to have been a member of an unlawful
combination and to have approved, authorized, and done some or all of the acts charged to have
been done by such combination, are entitled to a reversal of the decree as against them where the
corporation was found not to have participated in the combination.
[***HN3]
sufficiency -- participation in unlawful combination. --
Headnote:
An individual named as a defendant in a suit to enjoin an alleged violation of the Federal anti-trust
laws is not shown to have been a party to a combination among corporations owning patents on
machinery used in manufacturing glassware, to dominate the industry by a system of cross
licensing, where the only evidence to connect him therewith was that he was president of a
corporation charged as, but found not to be, a member of the combination, and that he owned
stock in another corporation which was an active member of the combination, and formerly had
been a director thereof, where he acquired his stock from a third corporation to aid it in a financial
difficulty, and there is no evidence that as a director he knew, approved, or voted in favor of any
of the actions taken pursuant to the conspiracy, but on the contrary he was shown by the evidence
to have advocated a more liberal licensing policy and lower royalties and to have asserted his own
company's right to make glassware of any character with any kind of machinery.
[***HN4]
restrictive cross-licensing under patents -- imposition of quotas by trade association. --
Headnote:
A combination to acquire patents on machines used in glassware manufacturing and to obtain
control of the glassware industry by leasing machines and licensing their use on terms which
restricted the field and limited the amount of manufacture of the licensees, and an association of
manufacturers of glass containers which assigned production quotas to its members, both acting
with a view to maintaining prices for unpatented glassware, may be enjoined as combinations in
violation of 1 and 2 of the Sherman Anti-trust Act, as amended, and 3 of the Clayton Act,
although after acquiring control of the industry, restrictions were withdrawn and exclusive rights
surrendered.
[***HN5]
sufficiency -- participation in unlawful combination. --
Headnote:
The mere cancelation of written agreements in restraint of trade between glassware manufacturers
and a corporation owning patents on machinery used in the manufacture of glassware and other
corporations owning other patents on such machinery, is not enough to acquit such corporation of
further participation in the conspiracy where it remained active in a glassware manufacturers'
association charged as a party to the combination by reason of the maintenance of a quota system
among its members, remained dominant as to a certain type of glass blowing machines, and
continued in close touch with a company controlling a large number of patents on glassware
making machinery and with other large manufacturers of glassware who were parties to the
conspiracy and who thereby had acquired domination of the industry.
[***HN6]
imposition of penalties in guise of injunctive relief. --
Headnote:
In a suit under the Federal antitrust laws to enjoin violations, the court may not impose penalties
in the guise of preventing future violations.
[***HN7]
injunctive relief -- permissible scope. --
Headnote:
Injunctive relief under the Federal anti-trust laws need not be confined to the exact type of acts
found to have been committed; and the court in framing its decree may resolve doubts in favor of
the government and may prohibit acts which, in another setting, would be unobjectionable.
[***HN8]
injunctive relief -- restrictions on. --
Headnote:
In awarding an injunction against violators of the Federal anti-trust laws, the court may not
impose upon the defendants any new duties, the creation of which is the function of Congress, or
place the defendants for the future in a different class than other people.
[***HN9]
injunctive relief -- vagueness. --
Headnote:
A decree against future violations of the Federal anti-trust laws must not be so vague as to put the
whole conduct of the defendants' business at the peril of a summons for contempt, enjoin "all
possible breaches of the law," or deprive the defendants of the protection of the law of the land.
[***HN10]
injunction against violations "as charged" -- impropriety. --
Headnote:
An injunction against violators of the Federal anti-trust laws may not, under the provisions of the
statutes and of Rule 65(d) of the Rules of Civil Procedure in Federal District Courts, and under
the decisions of the Supreme Court, enjoin defendants from violations "as charged in the
complaint."
[***HN11]
receivership pendente lite -- propriety of termination. --
Headnote:
A receivership pendente lite for a defendant corporation charged as a member of an unlawful
combination in restraint of trade in a suit by the government for an injunction against further
violation of the Federal anti-trust laws should be terminated by the final decree where its
continuance is not necessary to the prescription of appropriate relief.
[***HN12]
relief against combination made effective by control of patents -- disposition of royalties paid to
receiver pendente lite. --
Headnote:
The presumably reasonable royalties paid by a patent-owning corporation's lessees of patented
machinery to a receiver pendente lite appointed in a suit under the Federal anti-trust laws for an
injunction against such corporation and others charged with having made ownership of patents on
such machinery the means of dominating an industry, should be directed by the decree therein to
be paid over to the corporation unless it is found that such corporation has, since the entry of the
receivership decree, violated the antitrust laws; and in any event, the corporation should receive
out of the royalties compensation on a quantum meruit basis for services rendered by it to its
lessees. [Superseded by headnote 2, of the clarifying opinion in this case, post p. 357.]
[***HN13]
relief -- requiring abandonment of practice of leasing patented machines. --
Headnote:
A decree in a suit under the Federal anti-trust laws against certain corporations and their officers,
found to have dominated the glassware industry in such a way as to suppress competition and
maintain prices of the manufactured product by cross-licensing patents on machinery used in
making glassware and imposing restrictions in their leases of such machinery to manufacturers,
goes beyond what is necessary and is confiscatory in character in forbidding the corporate and
individual defendants who may thereafter engage in the business of distributing glassware
machinery to dispose or transfer possession of such machinery by any means other than an
outright sale, and in requiring one of them engaged in building and leasing such machinery to offer
to sell machines under lease to the lessee at a reasonable price, to be fixed, in case of dispute, by
the court, and requiring such defendants, if they engage in the business of distributing
glass-making machinery, to file a writing with the court agreeing to offer and to continue to offer
to sell any machinery used in the manufacture of glassware to any applicant at reasonable and
equal prices and upon reasonable and equal terms and conditions, and in enjoining each of the
defendants from engaging in the distribution of machinery used in glassware manufacture or in the
distribution of glassware in interstate commerce unless each shall agree to license without royalty
for the life of all patents any applicant to make, or to have made, and to use, any number of
machines or methods embodied in inventions covered by any patent or patent application which,
at the time of the decree, is owned or controlled by such defendant, to license at a reasonable
royalty to be fixed by the court in case of dispute any applicant to make, have made, and to use
any number of machines and methods in the manufacture of glassware embodying inventions
covered by patents thereafter applied for or owned or controlled by any defendant, and to make
available to any licensee, at cost plus a reasonable profit, all drawings and patterns relating to
machinery or methods used in the manufacture of glassware embodied in the licensed inventions,
where the validity of and the priority awarded by the Patent Office to the patents and the
reasonableness of the royalties exacted is unquestioned, and the lessor corporation has reduced all
of its royalties to a uniform scale and has waived and abolished all restrictions and limitations in
its outstanding leases, and where the decree as drawn binds every defendant forever, irrespective
of his connection with any other or of the independence of his actions.
[***HN14]
as property. --
Headnote:
A patent is property protected against appropriation both by individuals and by government.
[***HN15]
duty to use -- right to fix price for use by others. --
Headnote:
A patent owner may lawfully set the price for the use of the patented invention by others and may
elect to use it himself and refuse to license it, or to retain it and neither use nor license it.
[***HN16]
injunctive relief -- improper provisions. --
Headnote:
A provision of a decree in a suit by the government to enjoin future violations of the Federal
anti-trust laws which is vague, difficult of application, and not addressed to any practice indulged
in or threatened by any of the defendants, should be modified or eliminated.
[***HN17]
injunctive relief -- against whom permissible. --
Headnote:
A decree in an injunction suit by the government under the Federal anti-trust laws against a
combination which, by controlling patents on machinery used in making glassware, has been
enabled to dominate the industry and to maintain the prices of glassware, prohibiting defendants
from discriminating among customers in the filling of orders for machinery and from conspiring
with any other person or corporation to obstruct or delay the furnishing of any such machinery,
may properly issue against defendants not in the business of owning machinery patents or selling
or licensing glass-making machinery, where they are found to have conspired with defendants
engaged in such business in denying and obstructing the obtaining of machinery by competitors.
[***HN18]
injunctive relief -- against patent infringement suits. --
Headnote:
Defendants in a suit for an injunction under the Federal anti-trust laws, charged with conspiring to
dominate an industry and to maintain prices through the control of patented machinery and to
discourage by infringement suits the development of competing machinery, may properly be
enjoined from the further prosecution of pending suits for infringement of their patents.
[***HN19]
decree in injunction suit -- requiring grant of leases of patented machines and of licenses under
patents. --
Headnote:
Defendants in a suit for an injunction under the Federal anti-trust laws, found to have dominated
the glassware industry and to have maintained prices of glassware through their control of patents
on the machinery used, should be required by decree therein to lease or license glass-making
machinery of the classes manufactured by each to any who may desire to take licenses under
patents on such machinery, or on improvements, methods, or processes applicable thereto, at
standard royalties and without discrimination or restriction, and to release all claims for past
infringement against any alleged infringers who are willing to take such licenses, but without
prejudice to the future institution of infringement suits against persons refusing to take licenses
arising out of their use after the date of the decree, or suits for infringement after the date of the
final decree of patents not within the field of the combination. [Superseded by headnote 4, of the
clarifying opinion in this case, post, p. 358.]
[***HN20]
relief against combination of patent owners -- permitting existing licenses to stand. --
Headnote:
In framing a decree in an injunction suit under the Federal anti-trust laws against defendants found
to have dominated the glassware industry and to have maintained prices of glassware through
their control of patents on the machinery used, existing licensing agreements at uniform and
reasonable royalties and not containing restrictions or discriminatory features should be allowed
to stand; but the defendants should be enjoined from thereafter altering such agreements or any
subsequently made in like terms, without the approval of the court.
[***HN21]
relief against combination of patent owners -- permitting transfer of patents to stand. --
Headnote:
A settlement between two of the parties to a combination in violation of the Federal anti-trust
laws to control an industry through the ownership of patents, whereby one acquired from the
other certain patents, should, in a suit to enjoin future violation of the anti-trust laws, be permitted
to stand where the patents were acquired because of an asserted claim of infringement by
machines used by the transferee and the transferee has offered to dedicate to the public such of
the patents as have not expired.
[***HN22]
relief against combination of patent owners -- forbidding restrictions in leases or licensing
agreements. --
Headnote:
Provisions of a decree in an injunction suit under the Federal anti-trust laws against defendants
found to have dominated the glassware industry by pooling patents on machinery used therein and
attaching restrictions to licenses to use the patented invention, enjoining the insertion or
enforcement of restrictive provisions in leases or licensing agreements, is too broad where so
phrased as to cover every kind of invention and every patent, present or future, in any field,
without limitation as to time or as to any joint action or conspiracy violative of the anti-trust laws,
if owned or controlled or distributed by a defendant.
[***HN23]
relief against combination of patent owners -- requiring court approval of future agreements
between defendants. --
Headnote:
A provision in a decree in a suit under the Federal anti-trust laws to restrain future violations by
defendants found to have dominated an industry through control of patents on machinery used
therein and the imposition of restrictions on licensees, which requires court approval of "any
agreement between any of the defendants" and "of any license agreement made pursuant to this
judgment," without limit of time and not terminable upon fulfillment of any condition, is too
sweeping and, if retained, should be restricted in application to lease or license agreements and
agreements respecting patents and trade practices, production, and trade relations.
[***HN24]
relief against combination of patent owners -- prohibiting acquisition of stock or evidence of
indebtedness of any corporation in same line of business. --
Headnote:
A provision of a decree in a suit to restrain future violations of the Federal anti-trust laws by
certain corporations and individuals who are their officers and directors, found to have acquired
domination of the glassware industry through ownership of patents on machinery used therein and
the imposition of restrictions on licensees thereunder, enjoining each of the defendants from
"holding, controlling, directly or indirectly, . . . any of the issued and outstanding capital stock,
bonds, or other evidences of indebtedness of more than one corporation engaged either in the
manufacture and sale of glassware or in the manufacture or distribution of machinery used in the
manufacture of glassware, or in both," goes beyond what is necessary to prevent aggregation of
control and should be modified to prohibit only acquisition of stocks or bonds of any corporate
defendant by any other such defendant, and to prohibit only the acquisition of a measure of
control through ownership of stocks or bonds or otherwise by any individual in a company
competing with that with which he is officially connected or a subsidiary or affiliate of such
competing company.
[***HN25]
relief against combination of patent owners -- requiring disposal of stock. --
Headnote:
A provision of a decree in a suit to restrain future violations of the Federal anti-trust laws by
certain corporations and individuals who are their officers and directors, found to have acquired
domination of the glassware industry through ownership of patents on machinery used therein and
the imposition of restrictions on licensees thereunder, which require defendants owning stock in
any two of such corporations to divest themselves of their stock in one or the other within a
limited time, should, where it may prove difficult to dispose of the stock within such period
without severe loss, be so modified as to allow a longer time and to provide that, if both stocks
are held beyond the term fixed, the owner shall be deprived of the right to vote the stock of one
company or the other or to trustee the stock of one of the corporations.
[***HN26]
relief against combination of patent owners -- forbidding holding of office in any two
corporations. --
Headnote:
A decree in a suit to restrain future violations of the Federal anti-trust laws by certain
corporations and individuals who are their officers and directors, found to have acquired
domination of the glassware industry through ownership of patents on machinery therein and the
imposition of restrictions on licensees thereunder, which enjoins each individual defendant from
holding at the same time an office or directorship in more than one corporation which
manufactures and sells glassware or manufactures and distributes glass-making machinery,
without restriction to directorships in the defendant corporations, goes further than is necessary.
[***HN27]
relief against combination dominating industry -- forbidding acquisition of control of other
companies. --
Headnote:
The provision of a decree in a suit to enjoin future violations of the Federal anti-trust laws by
defendants found to have dominated the glassware industry through control of patents on
machinery used therein, which forbids the acquisition by any one of defendant companies or its
officers of the business or assets of any concern engaged in the manufacture or sale of glassware
or in the manufacture or distribution of machinery used in its manufacture, should be so modified
as to prohibit merely the acquisition of the business or assets of the competing concern unless the
acquisition is approved by the court.
[***HN28]
relief -- propriety of dissolving trade association. --
Headnote:
Where an association of manufacturers of glass containers is shown, in a suit for an injunction
under the Federal anti-trust laws, to have imposed quotas on its members and to have worked in
close co-operation with a corporation which controlled patents on machinery used in glassware
manufacture to discourage expansion of the industry and to prevent increased competition in the
glass container field, it should, although it may serve the industry as a statistical and research body
and in promoting better methods of manufacture and distribution, be dissolved instead of being
subjected to restrictions, in view of its past use as, and continued susceptibility of being made, an
instrument of restraint and monopoly and of the difficulty of detection, prevention, and
punishment of any resumption of violations of law.
[***HN29]
relief granted -- against whom injunction should run. --
Headnote:
In an injunction suit under the Federal anti-trust laws against a number of corporations and
individuals whose participation in an illegal combination was only in their capacity of officers of
the corporations, an injunction against future conduct should run against the corporate
defendants, "their officers, agents, and employees," rather than against the individual defendants
associated with the corporations.
[***HN30]
relief -- requiring trade information to be made public. --
Headnote:
The decree in a suit for injunctive relief against a manufacturers' association may not require all
trade information to be given to the public where to do so would render the assembly of it for the
information of members useless and actually detrimental to competition.
[***HN31]
injunctive relief -- modification to permit lawful transactions. --
Headnote:
A general injunction against future conduct of members of a combination which was unlawful
under the Federal anti-trust laws, designed to prevent future violations of such laws, should, in
order to permit usual business transactions not related to violations of the anti-trust statutes,
contain a proviso that nothing therein is to be construed to forbid normal business transactions of
any of the corporate defendants with its selling agents or consignees, persons or corporations
rendering services to it, or customers, or to prohibit transactions with citizens or corporations of
foreign nations, or to prevent any defendant from availing of the benefits of the Webb-Pomerene
Act, the Small Business Mobilization Act, or (save as elsewhere in the decree provided) of the
benefits of the patent laws.
[***HN32]
relief against combination of owners of patents -- prohibiting future acquisition of patent rights. --
Headnote:
A provision in a decree in a suit under the Federal anti-trust laws against defendants found to have
dominated the glassware industry through their control of patents on machinery used therein,
which enjoins all acquisition of patent rights in the glass-making field other than nonexclusive
licenses, running against each defendant individually, is inappropriate to restrain future violations
of the anti-trust statutes.
[***HN33]
relief against combination of owners of patents -- prohibiting future applications for patents. --
Headnote:
The decree in an injunction suit under the Federal anti-trust laws against defendants who have
been found to have dominated the glassware industry through control of patents on machines used
in the manufacture of glassware and who have been shown to have applied for patents to prevent
others from obtaining patents on improvements which might, to some extent, limit the return in
the way of royalties on the original invention, should restrain agreements and combinations with
this object, but should not preclude defendants, acting as individuals, from applying for patents on
inventions for their own improvements; nor should it enjoin application for a patent with the
intention of not making commercial use of the invention within four years from issue of the
patent.
SYLLABUS: 1. The conclusion that the corporate appellants and certain individual appellants
agreed, conspired and combined to monopolize, and did restrain and monopolize, interstate and
foreign commerce, by acquiring patents covering the manufacture of glassmaking machinery and
by excluding others from a fair opportunity to engage in commerce in such machinery and in the
manufacture and distribution of glass products, in violation of the antitrust laws, is supported by
the findings and the evidence. Sherman Act, @@ 1 and 2; Clayton Act, @ 3. Pp. 401-403.
(a) The conclusion that one of the corporate appellants had not abandoned the unlawful
conspiracy -- in view of its subsequent conduct and its continuing to share in the fruits of the
conspiracy -- is supported by the evidence. P.
407.
(b) The decree against four of the individual appellants, who were directors and officers of a
corporation as to which the complaint was dismissed, must be reversed because the allegations of
the bill are insufficient to support a decree against them; the findings do not support the decree as
to them; the refusal of findings requested by the Government exculpates them of participation in
the conspiracy; and the proofs fail to connect them with the conspiracy. P. 403.
(c) Use by the corporate appellants of their joint patent position to allocate fields of
manufacture and to maintain prices of unpatented glassware violated the antitrust laws. P. 406.
2. Upon consideration of objections to provisions of the decree of the District Court enjoining
violations of the antitrust laws, the decree is vacated and the cause is remanded for further
proceedings in conformity with the opinion of this Court. Pp. 408, 435.
(a) A decree enjoining violations of the antitrust laws may not impose penalties in the guise of
preventing future violations. P. 409.
(b) A decree of injunction against violations of the antitrust laws must not be so vague as to put
the whole conduct of the defendants' business at the peril of a summons for contempt; must not
enjoin all possible breaches of the law; and must not withdraw from the defendants the protection
of the law of the land. P. 410.
(c) The acts restrained by a decree of injunction must be described specifically therein and not
by reference to the bill of complaint. P. 410.
(d) Though useful pendente lite, the receivership and the impounding of funds, ordered in the
case of one of the corporate appellants, were not necessary to the prescription of appropriate
relief. The receivership should be terminated and the impounded funds disposed of as herein
directed. P. 411.
(e) Out of the royalties paid in by lessees of one of the corporate appellants, the latter should
receive compensation on a quantum meruit basis for services which it rendered to the lessees. P.
411.
(f) Provisions of the decree requiring each of the appellants to abstain forever from leasing
patented glassmaking machinery, and compelling each of them if he desires to distribute patented
machinery to sell the machine which embodies the patent to everyone who applies, at a price to be
fixed by the court, are confiscatory in effect and are unwarranted. P. 412.
(g) Provisions of the decree enjoining each of the appellants from engaging in the distribution of
glassmaking machinery or in the distribution of glassware in interstate commerce unless he agrees
(1) to grant royalty-free licenses under patents now owned; (2) to grant licenses at reasonable
royalties under after-acquired patents; and (3) to make available to any licensee, at cost plus a
reasonable profit, all drawings and patterns relating to the machinery or methods used in the
manufacture of glassware embodied in the licensed inventions, are confiscatory in effect and are
unwarranted. P. 413.
(h) For violations of the Sherman Act arising from the use of patent licenses, agreements, and
leases, the decisions of this Court in Morton Salt Co. v. Suppiger Co., 314 U.S. 488, and B. B.
Chemical Co. v. Ellis, 314 U.S. 495, do not authorize forfeiture of the patents. P. 415.
(i) A provision of the decree which is vague and would be difficult of application, and which
seems not to be addressed to any practice indulged in or threatened by any of the appellants,
should be modified or eliminated. P. 418.
(j) The corporate appellants should be enjoined from further prosecution of infringement suits
pending at the time this suit was brought; any alleged infringers who are willing to take
nondiscriminatory and nonrestrictive licenses at standard royalties should be released; and the
patent owner should be denied damages and profits which it might have claimed for past
infringement. But the decree should be without prejudice to future infringement suits against
persons refusing to take licenses after the date of the decree. The decree should not forbid any
defendant from seeking recovery for infringement, occurring after the date of the final decree, of
patents not covering feeders, formers, stackers, lehrs or processes or methods applicable to any
of them. P. 419.
(k) License agreements between the corporate appellants which are consistent with the views
here expressed should be allowed to stand; those found to be inconsistent should be ordered
reformed; and the appellants should be enjoined from altering the agreements, or any hereafter
made in like terms, without the approval of the court. P. 420.
(l) The decree should permit any corporate appellant, acting alone, to lease or sell patented
machinery or license the use of patents, if it so elects, provided always that no discrimination is
practiced and that no restrictive conditions be attached save with the approval of the court. P.
420.
(m) The decree should order dedication to the public of a patent which one of the corporate
appellants, to be free from the possible threat of suit for infringement, had acquired by assignment
from another. P. 421.
(n) A provision of the decree enjoining certain restrictive provisions in license agreements
should be amended to permit any appellant, corporate or individual, to retain and refuse to
license, to use and refuse to license, or to license with restrictions, any patent hereafter applied for
or acquired, except those applicable to feeders, formers, stackers and lehrs and processes and
methods applicable thereto. P. 424.
(o) A provision of the decree requiring court approval of "any agreement between any of the
defendants" and "of any license agreement made pursuant to this judgment" is too broad. If
retained, it should be restricted to lease or license agreements and agreements respecting patents
and trade practices, production, and trade relations. P. 424.
(p) A provision of the decree enjoining individual appellants from ownership of securities or
evidence of indebtedness of more than one corporation in the industry should be modified to
prohibit acquisition of stocks or bonds of any corporate appellant by any other such appellant, and
to prohibit any individual appellant from acquiring a measure of control, through ownership of
stocks or bonds or otherwise, in a company competing with that with which he is officially
connected or in a subsidiary or affiliate of such competing company. P. 425.
(q) As to certain individual appellants who own substantial amounts of stock of two of the
corporate appellants, a period longer than two years should be allowed for divestiture of the stock
of one or the other of the corporate appellants; and a proviso depriving them of the right to vote
the stock of one company or the other, or to trustee the stock of one of the corporations, if both
stocks are held longer than the term fixed, would be appropriate. P. 426.
(r) A provision of the decree enjoining individual appellants from holding an office or
directorship in more than one corporation which manufactures and sells glassware or
manufactures or distributes glassmaking machinery should be limited to such relationships in
competing companies. P. 426.
(s) Provisions of the decree enjoining acquisition by any of the corporate appellants of the
business or assets of any other corporation (other than a subsidiary), and by any individual
appellant of the business or assets of corporations other than that of which he is an officer or
director, should be limited to acquisition of the business or assets of competing companies. P.
426.
(t) The appellant trade association, which had been an important instrument of restraint and
monopoly, should be ordered dissolved, and the corporate defendants restrained for a period of
five years from forming or joining any such association. P. 428.
(u) An injunction binding the corporate appellants, their officers, agents and employees, is
sufficient to constrain the individual appellants so long as they remain in official relations, and to
bind their successors; it is unnecessary to enjoin the individual appellants as individuals. P. 428.
(v) A requirement that all trade information be given to the public is disapproved. P. 429.
(w) The injunction should permit, as here indicated, usual business transactions not related to
violations of the antitrust laws. P. 430.
(x) A provision of the decree which in effect prohibits the acquisition by any appellant of any
patent, or of a restricted license under any patent, is inappropriate. P. 431.
(y) The decree may properly restrain agreements and combinations whereby patents are applied
for and acquired to prevent others from obtaining patents on improvements which might affect
royalties on basic patents; but the decree may not prohibit corporate appellants from applying for
patents covering their own inventions in the art of glassmaking. P. 432.
(z) A provision of the decree enjoining each of the appellants from applying for a patent "with
the intention of not making use of the invention within four years" from date of issue can not be
sustained. P. 432.
(aa) The owner of a patent is under no obligation to use the patent or to grant its use to others.
P. 432.
(bb) A provision of the decree requiring the corporate appellants to submit to surveillance by
the Department of Justice and to furnish information with respect to their business should be
modified as was a similar provision in United States v. Bausch & Lomb Co., 321 U.S. 707. P.
433.
(cc) Where individual appellants have offended against the anti-trust laws by acting solely on
behalf of, or in the name of, a corporate appellant, the decree need not run against them as
individuals. P. 434.
(dd) A provision of the decree requiring one of the corporate appellants to cancel certain
agreements which excluded the parties named from entering the glass container business for a
period of years, which restrictions have already been released, is unnecessary. P. 435.
COUNSEL: Mr. John T. Cahill, with whom Messrs. Thurlow M. Gordon, Stuart S. Wall, Jerrold
G. Van Cise, James M. Carlisle, and E. J. Marshall were on the brief, for appellants in No. 2. Mr.
Thurlow M. Gordon, on the original argument, and Mr. Boykin C. Wright, on the reargument,
with whom Messrs. George Nebolsine, Halsey Sayles, Paul H. Fox, Thomas E. Harris, and John
W. Nields were on the brief, for appellants in No. 3. Mr. Robert T. Swaine, with whom Messrs.
Lloyd T. Williams, Henry A. Middleton, George B. Turner, Nestor S. Foley, Roy T. Parker, Jr.,
E. P. Wood, Albert R. Connelly, and Frederick H. Wood were on the brief, for appellants in No.
4. Mr. Stephen H. Philbin, with whom Mr. Joseph D. Stecher was on the brief, for appellants in
No. 5. Mr. Ralph Emery argued the cause on the original argument and submitted on the
reargument for appellants in No. 6. Mr. Lehr Fess, with whom Mr. Frank S. Lewis was on the
brief, for appellants in No. 7. Mr. E. W. McCallister, with whom Messrs. Carl F. Schaffer, A. M.
Bracken, and Wilber Owen were on the brief, for appellants in No. 8. Mr. Luther Day, with
whom Messrs. Rufus S. Day and Thomas O. Nevison were on the brief, for appellants in No. 9.
Mr. Fred E. Fuller, with whom Messrs. George D. Welles, Fred A. Smith, and Hugh C.
McLaughlin were on the brief, for appellants in Nos. 10 and 11.
Assistant Attorney General Cox and Mr. Samuel S. Isseks, with whom Solicitor General Fahy,
Assistant Attorney General Berge, and Messrs. Lawrence S. Apsey, Robert L. Stern, Edward H.
Levi, Philip Marcus, Lawrence C. Kingsland, Victor H. Kramer, and Seymour D. Lewis were on
the brief, for the United States.
Briefs of amici curiae were filed by Mr. Walter H. Buck on behalf of certain medium sized glass
manufacturing companies, urging reversal in part; and by Mr. Arnold Boyd on behalf of the Knox
Glass Companies, urging affirmance.
JUDGES: Stone, Roberts, Black, Reed, Frankfurter, Rutledge; Douglas, Murphy and Jackson
took no part in consideration or decision of this case.
OPINIONBY: ROBERTS
OPINION: [*392] [**377] [***351] MR. JUSTICE ROBERTS delivered the opinion of the
Court.
These are appeals from a decree n1 awarding an injunction against violations of [**378] @@ 1
and 2 of the Sherman Act, as amended, n2 and @ 3 of the Clayton Act. n3 Two questions are
presented. Were violations proved? If so, are the provisions of the decree right?
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n1 46 F.Supp. 541.
n2 15 U. S. C. @@ 1 and 2.
n3 15 U. S. C. @ 14.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
The complaint named as defendants 12 corporations and 101 individuals associated with them
as officers or directors. It was dismissed as to 3 corporations and 40 individuals. The
corporations are the leaders in automatic glassmaking machinery and in the glassware industry.
The charge is that all the defendants agreed, conspired, and combined to monopolize, and did
monopolize and restrain interstate and foreign commerce by acquiring patents covering the
manufacture of glassmaking machinery, and by excluding others from a fair opportunity freely to
engage in commerce in such machinery and in the manufacture and distribution of glass products.
The gravamen of the case is that the defendants have cooperated in obtaining and licensing
patents covering glassmaking machinery, have limited and restricted the use of the patented
machinery by a network of agreements, and have maintained prices for unpatented glassware.
The trial lasted 112 days. The court filed an opinion of 160 pages, 628 findings of fact and 89
conclusions of law, and entered a decree covering 46 printed pages and comprising 60 numbered
paragraphs. The printed record contains over 16,500 pages. An opinion of reasonable length
must deal in summary fashion with the facts disclosed by the proofs and leave much of the
detailed history [*393] of the transactions to be gleaned from the opinion below.
In 1912 Hartford-Fairmont Company was organized to combine the activities of two existing
companies interested in glass manufacture with those of a group of engineers who desired to
obtain and exploit patents for automatic glassmaking machinery. The defendant Corning Glass
Works was, at that time, engaged primarily in the production and distribution of incandescent
bulbs, sign and optical ware, heat-resisting ware and other specialty glassware. Its field may be
defined roughly as the pressed and blown field, or the noncontainer field. It has not made, and
does not now make, containers save a limited amount of tumblers. In 1909 persons interested in
Corning organized Empire Machine Company as a patent holding and developing company.
The defendant Owens-Illinois Glass Company (hereinafter called Owens) is a large
manufacturer of glass. Mr. Owens of that company produced the first fully automatic machine for
blowing bottles, which is known as a suction type machine. He was interested in companies
engaged in developing and manufacturing this type of machine and exercising the rights
represented by the Owens and related patents. From about 1904 the Owens group followed the
policy of granting exclusive licenses, in limited fields, for the manufacture of glassware by the
suction process. Owens itself was, and is, mainly interested in what is known as narrow neck
container ware. Prior to the Owens inventions glassmaking had been largely a hand process.
Thereafter, due to Owens' restrictive licensing policy, many [***352] glass manufacturers were
threatened with extinction unless some other competing machine could be devised. Ultimately a
process, called suspended gob feeding, was invented, which was more economical for certain
ware than the suction process, and could be [*394] applied in the manufacture of diversified
glassware. The introduction of the gob feeder machine threatened Owens' domination of the glass
machinery field and Owens, in self-protection, obtained patents and patent rights on gob feeders
and licensed some companies for their use.
Hartford-Fairmont was interested in the development of the gob feeder. It applied for some
patents and acquired others. In the meantime, it licensed gob feeder machinery, as Owens had
done with the suction machine, by restricting its use to the manufacture of specified ware. Empire
owned certain patent applications which were in interference with Hartford-Fairmont gob feeder
applications.
June 30, 1916, Hartford-Fairmont and Empire made an agreement whereby Empire was given
an exclusive license to use Hartford-Fairmont's patents for pressed and blown glassware and
Hartford-Fairmont was given an exclusive license to use Empire's patents for production of
containers. Thus Corning obtained exclusive [**379]rights, under the patents, for Corning's line
of ware, -- pressed and blown glass, -- and Hartford obtained the patent rights of both companies
in respect of other glassware. Negotiations led to agreements, October 6, 1922, whereby
Hartford-Empire (hereinafter called Hartford) was formed and took over all assets of
Hartford-Fairmont and of Empire relating to glass machinery. Empire received 43% of the stock
of the company and Corning retained approximately the same exclusive interest that Empire had
enjoyed under the 1916 agreement. Hartford retained approximately the same rights it had
obtained from Empire in 1916 subject to a shop right in Corning which has not been exercised.
Empire was dissolved in 1941.
After 1916 Hartford-Fairmont (and its successor Hartford) and Owens were competitors in the
gob feeding field; their applications were in interference in the Patent Office with each other and
with those of other applicants; and [*395]they were in litigation. As a result of negotiations for a
settlement of their disputes, they entered into an agreement April 9, 1924, whereby Owens
granted Hartford an exclusive license under Owens' patents for gob feeder and forming machines
and Hartford granted Owens a nonexclusive, nonassignable, and nondivisible license to make and
use machines and methods embodying patents then or thereafter owned or acquired by Hartford
for the manufacture of glassware, but Owens was not to sell or license gob feeding machinery and
was excluded from the pressed and blown field previously reserved to Corning. Owens was to
receive one-half of Hartford's divisible income from licenses over and above $ 600,000 per
annum. Owens retained a veto power on Hartford's granting new licenses on machines
embodying Owens' inventions. This provision was eliminated in 1931. The agreement left Owens
in full control of its patented suction process.
As soon as the agreement had been made, Hartford and Owens combined to get control of all
other feeder patents. In this endeavor they pooled the efforts of their legal staffs and contributed
equally to the purchase of patents and the expenses of litigation.
While patent claims upon applications controlled by Hartford and Owens were pending in the
Patent Office, Hartford purchased, under the joint arrangement, certain feeder patents and
applications belonging to outsiders, and persons to whom feeders had been sold or licensed by
such outsiders were persuaded to take licenses from Hartford. As a result of Hartford's and
Owens' joint efforts in connection with patent applications and purchases of applications [***353]
and patents of others, Hartford obtained what it considered controlling patents on gob feeders in
1926.
Hazel-Atlas Glass Company (hereinafter called Hazel) was second to Owens in the manufacture
and sale of glass containers. It had been using feeders of its own design [*396] and manufacture.
To build up further patent control, to discourage use of machinery not covered by their patents,
and to influence glassmakers to take licenses under Hartford's inventions, Hartford and Owens
desired that Hazel should become a partner-licensee. In 1924 they negotiated with Hazel to this
end and offered to return to Hazel a substantial portion of any royalties it would have to pay as a
licensee. No agreement was reached and Hartford brought infringement suits against Hazel and its
subsidiaries. One Circuit Court of Appeals decided favorably to Hazel; another favorably to
Hartford. Shortly after the latter decision, Hartford and Owens, in order to buttress the patent
situation, persuaded Hazel to make a settlement.
As of June 1, 1932, Hartford, Owens, and Hazel executed a series of agreements. Hartford
licensed Hazel under Hartford's patents, excluding from the license the pressed and blown field
reserved to Corning and with restrictions against sale or license by Hazel to anyone else. Hazel
licensed Hartford under all its glass machinery patents, present and future, to January 3, 1945.
Hazel paid Hartford $ 1,000,000 and agreed to pay Hartford royalties, and Hartford agreed that
Hazel and Owens should each receive one-third of Hartford's net income from royalties and
license fees over and above $ 850,000 per annum. Hartford and Owens readjusted their
contractual status to conform it to the agreements with Hazel. Owens maintained control of its
own suction inventions. It confirmed to Hazel its existing rights under earlier agreements to use
these. Owens obtained an option either to purchase, or to become [**380]licensee, of any suction
inventions controlled by Hartford and agreed, in event of such acquisition, to permit Hazel to use
them. Owens and Hazel had the option, on notice, to terminate their contracts with Hartford but
agreed mutually to protect each other in such event. The result of this combination was that
[*397] resistance to Hartford's licensing campaign disappeared and practically the entire industry
took licenses from Hartford.
Thatcher Manufacturing Company, a large manufacturer of milk bottles, early obtained an
exclusive license to manufacture them on the Owens suction machine. In 1920 Thatcher secured
the exclusive right to manufacture milk bottles on Hartford's paddle needle feeder and milk bottle
forming machine. It pressed for like rights under Hartford's later device, the single feeder. Though
refusing the grant, Hartford assured Thatcher that it would be given every consideration in the
grant of further licenses. By a supplemental agreement of December 1, 1925, Hartford, in view of
its "moral obligation" to Thatcher, agreed to pay and, until January 1, 1936, allowed Thatcher a
rebate on a certain portion of Thatcher's production, and, in 1928, agreed to give Thatcher the
refusal of any exclusive license on feeders and formers for production of milk bottles. In 1936 a
new agreement was made whereby Hartford agreed that, so long as Thatcher manufactured
750,000 gross per annum, Hartford would grant no other license for manufacture of milk bottles.
Ball Brothers, the largest manufacturer of domestic fruit jars, had used machines of its own
design as well as the Owens suction machines under license, but had never taken any license from
Hartford. In 1933 Ball took a license from Hartford, obtaining all the residual rights of Hartford
for the manufacture of fruit jars, and, inter alia, granted Hartford an option to take licenses on all
[***354] Ball's patents for glass machinery then owned or thereafter acquired. After discussion
as to the rights of Hazel and Owens to manufacture fruit jars, it was proposed that they be limited
by written agreement, Hazel to 300,000 gross and Owens to 100,000 gross annually. It was
decided not to have a written agreement but both have generally kept within these limits. When
the complaint [*398] was filed Ball Brothers manufactured approximately 54.5% of all the fruit
jars manufactured and sold in the United States, Hazel 17.6%, Owens 6.4%, and an outsider,
using a machine on which the patents had expired, 21.5%.
In granting licenses under the pooled patents Hartford always reserved the rights within
Corning's field. Further, it not only limited its licensees to certain portions of the container field
but, in many instances, limited the amount of glassware which might be produced by the licensee
and, in numerous instances, as a result of conferences with Owens, Hazel, Thatcher and Ball,
refused licenses to prevent overstocking the glassware market and to "stabilize" the prices at
which such ware was sold.
In the automatic manufacture of glassware, other machines are used in connection with the
feeders. These are known as forming machines, stackers, and lehrs. The purpose of Hartford and
Owens, participated in by the other three large manufacturers mentioned, was that there should be
gathered into the pool patents covering and monopolizing these adjunct machines so that
automatic glass manufacture, without consent of the parties to the pool, would become difficult if
not impossible.
Several forming machines not covered by Hartford patents were on the market. Without going
into detail, it is sufficient to say that, by purchases of patents and manufacturing plants, and by an
agreement with Hartford's principal competitor, Lynch Manufacturing Company, the field was
divided between Hartford and Lynch under restrictions which gave Hartford control. In the
upshot it became impossible to use Hartford feeders with any other forming machine than one
licensed by Hartford or used by its consent, and, as respects stackers and lehrs, Hartford attained
a similar dominant status.
In 1935 certain new agreements were made. Though the 1932 agreement between Hartford and
Hazel was substantially [*399] unaffected, the contract relationships between Hartford and
Owens were altered. The latter surrendered its right to one-third of Hartford's divisible royalty
and license income in consideration of Hartford's promise to pay $ 2,500,000 in quarterly
instalments. Owens extended the term of Hartford's license under certain Owens inventions and
Hartford [**381] granted Owens a royalty-free, nonexclusive license under all Hartford's suction
patents for the life of the patents, excluding, however, glassware in Corning's field. Other
unimportant changes were made in existing contracts. Owens and Hazel thereupon amended their
agreements so as to protect Hazel in event the contract relations between Owens and Hartford
should be altered.
Owens insists that, by the 1935 agreements, it terminated all its relations with others which
could violate the antitrust statutes. But the 1935 agreements left Hartford in undisputed control
of the gob feeder field, and Owens in like control of the suction field. And they evidently relied
on the situation which had been built up, their mutual interests, and other factors, as sufficient to
guarantee continuance of existing restraints and monopolies without the necessity of formal
contracts. The District Court found Owens did not abandon the conspiracy in 1935 and there is
evidence to support the conclusion.
In 1919 the Glass Container Association of America was formed. Prior to 1933 its members
produced 82% [***355] of the glass containers made in the United States and since have
produced 92%. Since 1931 (except while the National Industrial Recovery Act was in force) the
Association has had a statistical committee of seven, on which Owens, Hazel, Thatcher, and, since
1933, Ball were represented. These appellants also were represented in the Board of Directors.
Hartford, though not a member, has closely cooperated with the officers of the association in
efforts to discourage outsiders from increasing production [*400]of glassware and newcomers
from entering the field. The court below, on sufficient evidence, has found that the association,
through its statistical committee, assigned production quotas to its members and that they and
Hartford were zealous in seeing that these were observed.
In summary, the situation brought about in the glass industry, and existing in 1938, was this:
Hartford, with the technical and financial aid of others in the conspiracy, had acquired, by issue to
it or assignment from the owners, more than 600 patents. These, with over 100 Corning
controlled patents, over 60 Owens patents, over 70 Hazel patents, and some 12 Lynch patents,
had been, by crosslicensing agreements, merged into a pool which effectually controlled the
industry. This control was exercised to allot production in Corning's field to Corning, and that in
restricted classes within the general container field to Owens, Hazel, Thatcher, Ball, and such
other smaller manufacturers as the group agreed should be licensed. The result was that 94% of
the glass containers manufactured in this country on feeders and formers were made on machinery
licensed under the pooled patents.
The District Court found that invention of glassmaking machinery had been discouraged, that
competition in the manufacture and sale or licensing of such machinery had been suppressed, and
that the system of restricted licensing had been employed to suppress competition in the
manufacture of unpatented glassware and to maintain prices of the manufactured product. The
findings are full and adequate and are supported by evidence, much of it contemporary writings of
corporate defendants or their officers and agents.
In 1938 the Temporary National Economic Committee investigated the glassmaking industry.
Many of the facts disclosed in this record were developed. Subsequently this suit was brought
and, in pretrial conferences, the Government stated its view as to the terms of agreements [*401]
and the practices it deemed illegal. The principal corporate appellants had made some alterations
in their arrangements and, after institution of suit, -- and on occasions up to submission of the
case on the proofs, -- made further modifications on their own responsibility, and without
concurrence of the appellee or the judge, in an effort to remedy alleged illegal conditions.
As a consequence, when the case stood for decision, the situation was as follows: The
restrictions in the 1935 agreement between Hartford and Owens were removed, the exclusive
provision, and the exclusions of the manufacture of certain glassware embodied in the 1935
agreements between Owens and Hazel were waived by Owens. Ball had surrendered its residual
exclusive right for fruit jars and released a claim against Hartford thereunder for $ 425,000 in
consideration of Hartford surrendering its option to acquire any Ball feeder inventions. Hartford
withdrew the [**382] exclusive features of all its licenses of glass machinery. Hartford retained
dominance of the gob feeder field. Owens, although its basic patent had expired, continued, by
virtue of improvement patents, to dominate the suction field. Owens, Lynch, and Hartford were
the leaders, if not altogether dominant in the forming machine field.
In July 1939 the Association changed the nature of its statistical [***356]reports which the
court found were in reality assignments of quotas, and professed to have abandoned a voluntary
exchange of statistical data which had previously taken place at committee or general meetings. It
then adopted a form of statistical statement eliminating all forecasts and confined its reports to
past performances of the members.
We affirm the District Court's findings and conclusions that the corporate appellants combined
in violation of the Sherman Act, that Hartford and Lynch contracted in violation of the Clayton
Act, and that the individual appellants [*402]with exceptions to be noted participated in the
violations in their capacities as officers and directors of the corporations.
Certain individual appellants insist that the finding that they were parties to the conspiracy must
be set aside. In No. 10, Isaac J. Collins appeals from that portion of the decree which adjudges
him a party to the conspiracy and grants relief against him, and, in No. 11, Fulton, Fisher, and
Dilworth challenge their inclusion in the decree.
When suit was instituted Collins was president of, and Fulton, Fisher, and Dilworth were
officially connected with, Anchor Hocking Glass Company. All had been officers, directors, and
stockholders of companies which Anchor Hocking absorbed. Anchor Hocking is, and its
predecessors were, manufacturers of glassware. None were holders of machine patents or in the
glass machine business. In the bill of complaint the charges against individuals were made by
alleging that a company, and certain individual defendants connected with it, had become parties
to the conspiracy. The bill charged that in 1937 Anchor Hocking and certain defendants, being its
officers and directors, joined the conspiracy. The appellants in question were named as amongst
these Anchor Hocking defendants and were not elsewhere in the bill specifically charged with
otherwise participating in the conspiracy.
At the close of the Government's case motions were made to dismiss the bill as to Anchor
Hocking and all the directors and officers of that company, including Collins, Fulton, Fisher, and
Dilworth, on the ground that the Government had failed to prove any participation by them in the
alleged conspiracy. The court granted the motion with respect to all of them except Collins.
Thereupon these defendants withdrew and did not participate further in the trial. Some months
later, on a motion of the Government for rehearing of the order of [*403] dismissal, the court
refused to alter its order with respect to Anchor Hocking or the defendants associated with it,
save only Fulton, Fisher, and Dilworth. As to them, it granted rehearings and restored them as
defendants of record. When the findings and conclusions were entered these appellants were
named as participants in the conspiracy and were included in the injunctions embodied in various
sections of the decree.
We think the decree against them must be reversed for want of allegations in the bill sufficient
to support a decree against them; because the findings made do not support the decree as to them;
because the refusal of findings requested by the Government exculpates them of participation in
the conspiracy; and, finally, because the proofs fail to connect them with it.
Fulton, Fisher, and Dilworth each hold stock of Hartford which they acquired many years ago.
A company in which they were interested owned Hartford stock and pledged it under a mortgage.
The company got into difficulties, the mortgage was in default, and they and others took over the
pledged Hartford stock for cash so as to put the company in funds to refinance its mortgage.
[***HR1] The three appellants are amongst the two hundred or more stockholders of Hartford.
The bill does not, [***357] and could not, charge them in their capacity as stockholders of
Hartford, as parties to the conspiracy, and they are not to be enjoined by reason of their stock
holdings in Hartford.
[***HR2] As we have said, they were officers and directors of certain predecessor companies
[**383] taken over by Anchor Hocking, which were not charged in the bill as participants in the
conspiracy. Anchor Hocking was so charged and these appellants and other individuals were
charged in the bill to have been, and then to be, officers and directors participating in the direction
and management of Anchor Hocking. The complaint adds: "Such individual defendants [*404]
have approved, authorized, ordered, and done some or all the acts herein alleged to have been
performed by defendant Anchor Hocking." They are not otherwise specifically charged with
participating in the conspiracy. It would seem, therefore, that when Anchor Hocking was found
not to have participated the only basis for charging them disappeared. Moreover, the
Government's proofs went no farther than to show that these appellants acted in the business
affairs of Anchor Hocking. There is no proof that they conspired or cooperated with other
companies parties to the conspiracy, or with other individuals who were officers and directors of
such corporations. The only findings as to all are to the effect that they have been officers and
directors of Anchor Hocking and its predecessors, and stockholders of Hartford and, as to one,
that, in addition, as a Hartford-Fairmont stockholder, he signed the agreement in 1922 for the
formation of Hartford-Empire. The Government requested the court to find, with respect to
them, a number of facts which, if found, would have connected them with the conspiracy. The
court refused the requests. Nowhere in the findings or in the opinion is any reason given why
these appellants should be included in the injunction. As to them, the decree must be reversed.
[***HR3] Anchor Hocking was a licensee of Hartford machinery. The appellant Collins thought
the royalty charged was excessive and complained repeatedly about it; and, believing that his
company was free to make glass of any character on any kind of machinery, he complained about
the exclusive features of the license. He repeatedly aroused the resentment of Hartford and some
of the other participants in the conspiracy by his assertion of the purpose to use machinery and to
manufacture glassware in ways they thought contrary to his company's rights as a licensee. There
were even discussions as to [*405] whether the company should be sued. This evidence is
uncontradicted.
Collins is a stockholder of Hartford. He acquired his original stock interest in the same way
that Fulton, Fisher, and Dilworth did. In 1926 he was elected a director, and remained such until
1937, when he resigned. This was prior to the T. N. E. C. hearing in which the Hartford licensing
system was investigated and prior to the institution of suit. There is no evidence or finding of any
reasonable likelihood that he will resume the directorship. Moreover, the bill charges that Anchor
Hocking and the individuals connected with it entered the conspiracy in 1937.
The bill does not charge Collins with any act as officer or director of, or as participant in the
direction and management of, Hartford. The only charge against him is in respect of his
connection with Anchor Hocking. The evidence is that Collins was an irregular attendant at
directors' meetings of Hartford; that he was not on any committee of the board which had direct
contact with the management and patent affairs of Hartford; that he did not know of the preferred
terms under which Owens and Hazel were licensed by Hartford until the matter was disclosed
[***358] in the T. N. E. C. hearings and then criticized the arrangement. There is no evidence
that, as a director of Hartford, he knew, approved, or voted in favor of any of the actions taken
pursuant to the conspiracy. On the contrary, the evidence is uncontradicted that he repeatedly
advocated more liberal licensing by Hartford and thought its royalties too high. As in the case of
the other appellants mentioned, the Government requested findings of fact which, if made, would
have spelled out a connection between Collins and the other conspirators but these were refused
by the judge. Collins is found to have been, and still to be, a member of the Association's [*406]
statistical committee, but the bill does not charge him individually with any conduct in that
relation. Of course, any injunction against the Association and its officers and agents will bind
him so long as he remains in that relationship. Two other findings as to his activities as a director
of Hartford, and as president of General Glass Company, touch matters as to which the bill of
complaint is silent and concerning [**384] which the evidence is not persuasive of participation in
any conspiracy charged or proved. We are of opinion that as to Collins, the bill should be
dismissed.
I
[***HR4] Little need be said concerning the legal principles which vindicate the District Court's
findings and conclusions as to the corporate appellants and the individual appellants who as
officers or directors participated in the corporate acts which forwarded the objects of the
conspiracy. As was said in Standard Sanitary Mfg. Co. v. United States, 226 U.S. 20, 49:
"Rights conferred by patents are indeed very definite and extensive, but they do not give any
more than other rights an universal license against positive prohibitions. The Sherman law is a
limitation of rights, rights which may be pushed to evil consequences and therefore restrained."
The difference between legitimate use and prohibited abuse of the restrictions incident to the
ownership of patents by the pooling of them is discussed in Standard Oil Co. v. United States,
283 U.S. 163. Application of the tests there announced sustains the District Court's decision. It is
clear that, by cooperative arrangements and binding agreements, the appellant corporations, over
a period of years, regulated and suppressed competition in the use of glassmaking machinery and
employed their [*407] joint patent position to allocate fields of manufacture and to maintain
prices of unpatented glassware.
The explanations offered by the appellants are unconvincing. It is said, on behalf of Hartford,
that its business, in its inception, was lawful and within the patent laws; and that, in order to
protect its legitimate interests as holder of patents for automatic glass machinery, it was justified
in buying up and fencing off improvement patents, the grant of which, while leaving the
fundamental inventions untouched, would hamper their use unless tribute were paid to the owners
of the so-called improvements which, of themselves, had only a nuisance value.
The explanation fails to account for the offensive and defensive alliance of patent owners with
its concomitant stifling of initiative, invention, and competition.
[***HR5] Nor can Owens' contention prevail that it long ago abandoned any cooperation with
the other corporate defendants and has been free of any trammel to unrestricted competition
either in the machinery or glass field. Owens remained active in the association. It remained
dominant in the suction field. It continued in close touch with Hartford and with other large
manufacturers of glassware who were parties to the conspiracy. The District Court was justified
in finding that the mere cancellation [***359] of the written word was not enough, in the light of
subsequent conduct, to acquit Owens of further participation in the conspiracy.
Individual appellants, except Collins, Fulton, Fisher, and Dilworth, who were officers or
directors of corporate appellants each did one or more acts, such as negotiating, voting for, or
executing agreements which constituted steps in the progress of the conspiracy. To this extent
they participated in violations of the statutes. Some were more active and played a more
responsible role than others.
[*408] II
The Government sought the dissolution of Hartford. The court, however, decided that a
continuance of certain of Hartford's activities would be of advantage to the glass industry and
denied, for the time being, that form of relief. The court was of opinion, however, that the long
series of transactions and the persistent manifestations of a purpose to violate the antitrust statutes
required the entry of a decree which would preclude the resumption of unlawful practices. It was
faced, therefore, with the difficult problem of awarding an injunction which would insure the
desired end without imposing punishments or other sanctions for past misconduct, a problem
especially difficult in view of the status and relationship of the parties.
At the trial the Government stated that in this suit it was not attacking the validity of any patent
or claiming any patent had been awarded an improper priority.
At the time of the District Court's decision, Hartford had reduced the royalties of all its licensees
to its then schedule of standard royalties so that all stood on an equal basis so far as license fees
were concerned. Government counsel did not assert, [**385] or attempt to prove, that these
royalties were not reasonable in amount.
Owens, as respects suction invention licenses, had removed all restrictive clauses; Hartford had
done the same with respect to all its glass machinery licenses and so had Hartford and Lynch with
respect to forming machine licenses. At the moment, therefore, no licensee was restricted either as
to kind or quantity of glassware it might manufacture by use of the patented machines, and no
patent owner was restricted by formal agreement as to the use or licensing of its patents.
Just before the trial, Hartford conveyed three patents to Corning and complaint was made of
this transaction. [*409] Corning paid a substantial sum for the transfer, evidently to prevent
Hartford's obstructing Corning's free and untrammeled use of its own patents. Two of the
assigned patents have expired and Corning professes its willingness to dedicate the third to the
public.
The association had ceased to allot quotas amongst the glass manufacturers or to furnish
advance information or make recommendations to its members. The licensing system of Hartford
remained that of leasing machinery built for it embodying the patented inventions. Rentals
consisted of standard royalties on production. Under this system Hartford rendered a service in
the repair, maintenance, and protection of the machines, which is valuable, if not essential, to the
users. This was the status with which the court had to deal.
[***HR6] [***HR7] [***HR8] [***HR9] The applicable principles are not doubtful. The
Sherman Act provides criminal penalties for its violation, and authorizes the recovery of a penal
sum in addition to damages in a civil suit by one injured by violation. It also authorizes an
injunction to prevent continuing violations by those acting contrary to its proscriptions. The
present suit is in the last named category and we may not impose penalties n4 in the [***360]
guise of preventing future violations. This is not to say that a decree need deal only with the
exact type of acts found to have been committed n5 or that the court should not, in framing its
decree, resolve all doubts in favor of the Government, n6 or may not prohibit acts which in
another setting would be unobjectionable. But, even so, the court may not create, as to the
defendants, new duties, prescription of which is the function of Congress, or place the defendants,
for the future, "in a different class than other people," as the Government [*410] has suggested.
The decree must not be "so vague as to put the whole conduct of the defendants' business at the
peril of a summons for contempt"; enjoin "all possible breaches of the law"; n7 or cause the
defendants hereafter not "to be under the protection of the law of the land." n8 With these
principles in mind we proceed to examine the terms of the decree entered. No reference will be
made to paragraphs as to which the appellants do not object if any decree is to be entered, nor to
those concerning which we think objection is not well founded.
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n4 Standard Oil Co. v. United States, 221 U.S. 1, 77-78.
n5 Ethyl Gasoline Corp. v. United States, 309 U.S. 436, 461.
n6 Local 167 v. United States, 291 U.S. 293, 299.
n7 Swift & Co. v. United States, 196 U.S. 375, 396; Labor Board v. Express Publishing Co.,
312 U.S. 426, 433, 435-6.
n8 New York, N. H. & H. R. Co. v. Interstate Commerce Comm'n, 200 U.S. 361, 404;
Standard Oil Co. v. United States, supra, 80.
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The decree must be modified to eliminate the appellants Collins, Dilworth, Fulton, and Fisher.
Paragraph 1 (D) should be modified to limit its coverage to the United States, and clause (a)
should be stricken as too indefinite for enforcement.
The Government concedes that paragraph 5 should be modified to confine to heat-resistant
ware the adjudication that Corning, Hartford, and Empire, and the individual defendants
associated with each, have monopolized and attempted to monopolize trade in violation of @ 2 of
the Sherman Act. This involves exclusion from the paragraph of reference to laboratory, [**386]
paste mold, and electrical ware. To comport with the record the phrase "ovenware" should be
substituted for "heat-resistant ware."
[***HR10] The Government also agrees to the elimination of paragraph 9, which generally
enjoins the appellants from violations "as charged in the complaint." This concession is required
by statute, by the Rules of Civil Procedure, and by our decisions. n9
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n9 Rule 65 (d), 28 U. S. C. A. following @ 723c; @ 19 of the Clayton Act, 38 Stat. 738, 28 U.
S. C. @ 383; Swift & Co. v. United States, 196 U.S. 375, 396, 401.
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[*411] The court appointed a receiver for Hartford pendente lite. By paragraphs 10 to 20 of
the final decree it continued him in office and gave directions as to his administration of Hartford's
affairs, including certain actions to be taken to effectuate features of the decree affecting
Hartford's business and licenses, which will later be described, and meantime to continue the
receipt of royalties under existing licenses, these to be repaid to the licensees on the decree
becoming final. The court also ordered the impounding of the sums payable by Hazel to Hartford,
and by Hartford to Hazel, under the 1932 agreement, until the decree should become final. Ball
Brothers was ordered to pay into court the $ 425,000 [***361] received from Hartford pursuant
to the amendment, August 1, 1940, of Ball's feeder license agreement, but no disposition of the
fund was directed (Paragraph 44). Corning was directed to pay into court the moneys received by
it from Hartford in connection with the amending agreements of September 23 and December 1,
1940, and that fund is held by the clerk pending the further order of the court (Paragraph 45-A).
[***HR11] [***HR12] While useful for the preservation of rights pending the determination of
this litigation, in the light of what is hereafter said as to the substantive provisions of the decree,
the receivership and the impounding of funds were not necessary to the prescription of
appropriate relief. The receivership should be wound up and the business returned to Hartford.
The royalties paid to the receiver by Hartford's lessees may, unless the District Court finds that
Hartford has, since the entry of the receivership decree, violated the antitrust laws, or acted
contrary to the terms of the final decree as modified by this opinion, be paid over to Hartford. In
any event Hartford should receive out of these royalties compensation on a quantum meruit basis,
for services rendered to lessees. The other funds paid into court and impounded in the registry
should be repaid to those who paid them into court.
[*412]
[***HR13] Paragraphs 21, 22, and 23 apply to the corporate defendants and to any of the
individual defendants who shall hereafter engage in the business of distributing glassware
machinery. They forbid any disposition or transfer of possession of such machinery by any means
other than an outright sale, and require Hartford to offer in writing to sell each of the present
lessees all the machinery now under lease to such lessee at a reasonable price to be fixed in
consideration of the fees and royalties heretofore paid, any dispute as to price to be settled by the
court. All of the corporate defendants and the individual defendants are required, if they engage
in the business of distributing glassmaking machinery, to file a writing with the court agreeing to
offer, and to continue to offer, to sell any machinery used in the manufacture of glassware to any
applicant at reasonable and equal prices and upon reasonable and equal terms and conditions.
All of the appellants attack these provisions. A common ground is that this court has held that
the lease of a patented machine is a lawful method of exercising the exclusive patent right of
practicing or using the invention, n10 and that effective relief may be afforded without destroying
the appellants' property rights in the patents they own.
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n10 United States v. United Shoe Machinery Co., 247 U.S. 32; United Shoe Machinery Corp.
v. United States, 258 U.S. 451, 462. In this case the court divided on the question of the legality
of certain terms of the leases in question, but the dissenting justices did not suggest that a lease
was not an appropriate method of exercising rights under the patent. Cf. International Business
Machines Corp. v. United States, 298 U.S. 131.
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Hazel, Thatcher, and Ball object to the [**387] injunction directed to them on the ground that
none of them has ever been in the business of selling, licensing, or distributing such machinery.
The Government replies that the injunction is intended only to prevent them from again [*413]
setting up a patent pool and monopolizing the patented inventions. The decree should enjoin the
defendants from setting up such a pool or combining or hereafter agreeing to monopolize the
glass machinery or the glassware industry, as we think it does in other paragraphs. But the decree
as entered requires that each of the defendants must hereafter forever [***362] abstain from
leasing a patented machine, no matter what the date of the invention, and compels each of them if
he desires to distribute patented machinery to sell the machine which embodies the patent to
everyone who applies, at a price to be fixed by the court. The injunction as drawn is not directed
at any combination, agreement or conspiracy. It binds every defendant forever irrespective of his
connection with any other or of the independence of his action.
Paragraph 24 enjoins each of the corporate and individual appellants from engaging in the
distribution of machinery used in glass manufacture or in the distribution of glassware in interstate
commerce unless each files with the court an agreement (a) to license, without royalty or charge
of any kind, and for the life of all patents, any applicant to make, to have made for it, and to use
any number of machines and methods embodied in inventions covered by any patent or patent
application now owned or controlled by such defendant; (b) to license, at a reasonable royalty (to
be fixed by the court, in case of dispute) any applicant to make, have made for it, and to use any
number of machines and methods in the manufacture of glassware embodying inventions covered
by patents hereafter applied for or owned or controlled by any defendants; (c) to make available
to any licensee, under "(a)" and "(b)," at cost, plus a reasonable profit, all drawings and patterns
"relating to the machinery or methods used in the manufacture of glassware" embodied [*414] in
the licensed inventions (with immaterial exceptions).
Since the provisions of paragraphs 21 to 24 inclusive, in effect confiscate considerable portions
of the appellants' property, we think they go beyond what is required to dissolve the combination
and prevent future combinations of like character. It is to be borne in mind that the Government
has not, in this litigation, attacked the validity of any patent or the priority ascribed to any by the
Patent Office, nor has it attacked, as excessive or unreasonable, the standard royalties heretofore
exacted by Hartford. Hartford has reduced all of its royalties to a uniform scale and has waived
and abolished and agreed to waive and abolish all restrictions and limitations in its outstanding
leases so that every licensee shall be at liberty to use the machinery for the manufacture of any
kind or quantity of glassware comprehended within the decree. Moreover, if licenses or
assignments by any one of the corporate defendants to any other still contain any offensive
provision, such provision can, by appropriate injunction, be cancelled, so that the owner of each
patent will have unrestricted freedom to use and to license, and every licensee equally with every
other will be free of restriction as to the use of the leased or licensed machinery, method or
process, or the articles manufactured thereon or thereunder.
It is suggested that there is not confiscation since Hartford might, with the later consent of the
court, sell its patents. Under the decree as entered below nothing can be obtained by Hartford for
the use of its patents and we cannot speculate as to what might be the ultimate adjustments made
by the trial court in the decree.
If, as suggested, some of Hartford's patents were improperly obtained, or if some of them were
awarded a priority to which the invention was not entitled, avenues [*415] are open to the
Government to raise these questions and to have the patents cancelled. But if, as we must assume
on this record, a defendant owns valid patents, it is difficult to say that, however much in the past
such defendant has abused the rights thereby conferred, it must now dedicate them to the public.
[***HR14] That a patent is property, protected against appropriation both by individuals
[***363] and by government, has long been settled. n11 In recognition of this quality of [**388]
a patent the courts, in enjoining violations of the Sherman Act arising from the use of patent
licenses, agreements, and leases, have abstained from action which amounted to a forfeiture of the
patents. n12
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n11 James v. Campbell, 104 U.S. 356, 357, 358; Hollister v. Benedict & Burnham Mfg. Co.,
113 U.S. 59, 67; Wm. Cramp & Sons Co. v. International Curtis Marine Co., 246 U.S. 28, 39-40;
United States v. Dubilier Condenser Corp., 289 U.S. 178, 189.
n12 See Standard Sanitary Mfg. Co. v. United States, 226 U.S. 20. Decrees and Judgments in
Federal Antitrust Cases (1918) p. 265; United States v. Motion Picture Patents Co., 225 F. 800,
appeal dismissed 247 U.S. 524. Decrees and Judgments in Federal Antitrust Cases (1918) pp.
379-380; United Shoe Machinery Corp. v. United States, 258 U.S. 451; Ethyl Gasoline Corp. v.
United States, 309 U.S. 436; United States v. Univis Lens Co., 316 U.S. 241.
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The Government urges that such forfeiture is justified by our recent decisions in Morton Salt
Co. v. G. S. Suppiger Co., 314 U.S. 488, and B. B. Chemical Co. v. Ellis, 314 U.S. 495. But
those cases merely apply the doctrine that, so long as the patent owner is using his patent in
violation of the antitrust laws, he cannot restrain infringement of it by others. We were not there
concerned with the problem whether, when a violation of the antitrust laws was to be restrained
and discontinued, the court could, as part of the relief, forfeit the patents of those who had been
guilty of the violation. Lower federal courts [*416] have rightly refused to extend the doctrine of
those cases to antitrust decrees by inserting forfeiture provisions. n13
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n13 American Lecithin Co. v. Warfield Co., 105 F.2d 207, 211; Novadel-Agene Corp. v. Penn,
119 F.2d 764, 766-7; Sylvania Industrial Corp. v. Visking Corp., 132 F.2d 947, 958; Universal
Sewer Pipe Corp. v. General Construction Co., 42 F.Supp. 132, 134; American Lecithin Co. v.
Warfield Co., 42 F.Supp. 270, 272.
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Legislative history is also enlightening upon this point. Repeatedly since 1908 legislation has
been proposed in Congress to give the courts power to cancel a patent which has been used as an
instrument to violate antitrust laws. n14 Congress has not adopted such legislation. The
temporary National Economic Committee recommended imposition of such a penalty for violation
of antitrust laws. n15 But its recommendation was not adopted by Congress.
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n14 H. R. 20388, 60th Cong., 1st Sess. (1908); H. R. 11796, 61st Cong., 1st Sess. (1909); H.
R. 2930, 62d Cong., 1st Sess. (1911); H. R. 16828, 62d Cong., 2d Sess. (1912); H. R. 23417, as
amended, 62d Cong., 2d Sess. (1912); H. R. 1700, 63d Cong., 1st Sess. (1913); H. R. 14865, 63d
Cong., 2d Sess. (1914); S. 2783, 70th Cong., 2d Sess. (1928); S. 2491, 77th Cong., 2d Sess.
(1942).
n15 Final Report and Recommendations of the Temporary National Economic Committee, Sen.
Doc. No. 35, pp. 36-7 (1941), 77th Cong., 1st Sess. See also Preliminary Report Sen. Doc. No.
95, pp. 16-17 (1939), 76th Cong., 1st Sess.
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The Government suggests that certain earlier decisions under the Sherman Act, by analogy,
support these portions of the decree. n16 The cases cited, however, do not sustain the suggestion.
In all of them the court refrained from ordering compulsory [***364] dealing with the assets of
the defendant without compensation and, in most of them, the decrees merely called for
rearrangement of ownership, not for its destruction.
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - - n16 United States v. American
Tobacco Co., 221 U.S. 106; United States v. Terminal Railroad Association, 224 U.S. 383;
United States v. Great Lakes Towing Co., 217 F. 656, appeal dismissed 245 U.S. 675; United
States v. New England Fish Exchange, 258 F. 732; United States v. Pullman Co., 50 F.Supp. 123.
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[*417]
[***HR15] Under paragraph 24 (b) a defendant hereafter acquiring a patent cannot set the price
for its use by others, elect to use it himself and refuse to license it, or to retain it and neither use
nor license it. These are options patent owners have always enjoyed. n17
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n17 Paper Bag Patent Case, 210 U.S. 405, 424; Motion Picture Patents Co. v. Universal Film
Mfg. Co., 243 U.S. 502, 510, 514; Crown Die & Tool Co. v. Nye Tool & Machine Works, 261
U.S. 24, 34-35.
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[**389] Congress was asked as early as 1877, and frequently since, to adopt a system of
compulsory licensing of patents. n18 It has failed to enact these proposals into law. It has also
rejected the proposal that a patentee found guilty of violation of the antitrust laws should be
compelled, as a penalty, to license all his future inventions at reasonable royalties. n19 The
Temporary National Economic Committee recommended congressional adoption of such a
system, n20 but Congress took no action to that end.
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n18 H. R. 8776, 62d Cong., 1st Sess. (1911); S. 2116, 62d Cong., 1st Sess. (1911); H. R.
26185, 62d Cong., 2d Sess. (1912); S. 2303, 77th Cong., 2d Sess. (1942); S. 2730, 77th Cong.,
2d Sess. (1942); H. R. 1371, 78th Cong., 1st Sess. (1943); cf. S. 300, 45th Cong., 1st Sess.
(1877).
n19 S. 2783, 70th Cong., 2d Sess. (1928).
n20 Final Report and Recommendations of the Temporary National Economic Committee,
Senate Doc. No. 35, pp. 36-7 (1941), 77th Cong., 1st Sess.
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Paragraph 24 (a) of the decree should be modified to permit the reservation of reasonable
royalties and its provisions should be restricted to feeders, formers, stackers and lehrs and patents
covering these or improvements of them, or methods or processes used in connection with them.
Paragraph 24 (b) should be limited in respect of future applications and resulting patents or
patents hereafter acquired by assignment, to those covering feeders, formers, stackers and lehrs,
or parts thereof or improvements thereon, and methods and processes involved in their
construction [*418] and operation. For example, if Ball or Thatcher should procure a patent on a
bottle-capping machine or for a composition of glass, there is no reason to compel a license to
Hartford or Hazel or anyone else. Other paragraphs of the decree preclude a misuse of the patent
in violation of the antitrust laws.
Paragraph 24 (c) should be deleted.
Paragraph 25 restrains all the corporate and individual appellants, whenever regularly engaged
in the manufacture of glassware for interstate commerce, from discrimination "by means of wholly
exclusive or partially exclusive requirement contracts" "or otherwise" against any such
manufacture, present or prospective; or in the filling of orders for machinery on the basis of the
size of the order or credit rating of the customer, if he is willing to pay cash, his standing in the
industry or otherwise; and from conspiring with any other person or corporation to obstruct or
delay the furnishing of any such machinery.
[***HR16] The earlier portion of the paragraph is vague and would be difficult of application. It
seems not to be addressed to any practice indulged in or threatened by any of the appellants. It
should, therefore, be modified or eliminated. The last five lines of the paragraph are appropriate
although the matters covered by them are apparently embraced in other portions of the decree.
[***HR17] Thatcher and Ball insist that no such injunction should be directed [***365] to them
for the reason that they are not now, and never have been, in the business of owning machinery
patents or selling or licensing glassmaking machinery. We think, however, in view of the fact that
they have been found to have conspired with Hartford and the other appellants in denying and
obstructing competitors from obtaining machinery, the injunction, modified as suggested, may
stand against them.
Paragraph 26 enjoins all of the corporate appellants, and all of the individuals associated with
them, until the [*419] entry of a finding by the court on the petition of any defendant that the
consequences of the conduct of the defendants in violation of the antitrust laws have been fully
dissipated, from the following acts: (a) bringing, maintaining, or taking any action in any suit for
infringement of any patent owned or controlled or hereafter issued on pending applications
covering glassware machinery; (b) attempting to interfere, by suit or otherwise, with the
possession of any machinery owned, or claimed to be owned, by any appellant which is in the
possession of any licensee except sale to the licensee pursuant to paragraph 21; (c) attempting to
collect royalties or license fees for the use of any inventions covered by existing patents or
applications for patents for glassware machinery.
[**390]
[***HR18] [***HR19] Since paragraphs 21 to 24 (a) inclusive are to be eliminated, this
paragraph, which is ancillary to them, should also be deleted from the decree, but in view of the
nature of the conspiracy found, an injunction should go against the further prosecution of all
infringement suits pending at the date this suit was brought. Hartford and the other corporate
defendants mentioned in paragraph 24 should be required to lease or license glassmaking
machinery of the classes each now manufactures to any who may desire to take licenses (under
patents on such machinery or on improvements, methods or processes applicable thereto), at
standard royalties and without discrimination or restriction, and if at the time of entry of the
decree there are any alleged infringers who are willing to take such licenses they should be
released, and the patent owner deprived of all damages and profits which it might have claimed
for past infringement. The decree should, however, be without prejudice to the future institution
of any suit or suits for asserted infringements against persons refusing to take licenses under any
of the presently licensed inventions arising out of their use after the date of the decree. The decree
should not forbid any [*420] defendant from seeking recovery for infringement, occurring after
the date of the final decree, of patents not covering feeders, formers, stackers, lehrs or processes
or methods applicable to any of them.
Paragraph 27 cancels all outstanding agreements between corporate appellants, including all
modifications made prior to or pending trial. This is consonant with the terms of the earlier
paragraphs which require corporate appellants to license all inventions involved, royalty free, and
to sell machines embodying such inventions.
[***HR20] In view of what we have already said about these earlier paragraphs, the license
agreements as modified by the parties and in accordance with the views here expressed, should be
allowed to stand. As has been noted, these are all at uniform royalties, and all without restrictions
or discriminatory features. We do not understand that, as modified, any of these agreements is
attacked as containing improper or unlawful provisions. If, however, any of them is found still to
embody provisions inconsistent with the form of relief we have outlined, its reformation should be
decreed. The appellants should be enjoined from hereafter altering these agreements, or any
hereafter made in like terms, without the approval [***366] of the court. If the existing royalties
are excessive these may be reduced to a fair and reasonable basis. The decree should permit any
corporate appellant, acting alone, to lease or sell patented machinery or license the use of patents,
if it so elects, provided always that no discrimination be practiced and that no restrictive
conditions be attached (except as stated in connection with paragraph 29) save with the approval
of the court.
A word should be said with respect to the effect of this paragraph in cancelling the agreement of
September 23, 1940, between Hartford-Empire and Corning, and the assignment of three patents
to Corning pursuant thereto.
[*421] It will be recalled that, prior to the trial, Corning and Hartford cancelled the 1916 and
1922 agreements which the court found illegal and which the decree ordered cancelled
notwithstanding the parties' prior action. Further, Corning was given an unrestricted license by
Hartford which will require the payment of increased royalties by Corning for use of Hartford's
inventions. In consideration of the cancellation of the agreements, Hartford agreed to pay Corning
$ 1,125,000, in installments, and to transfer to Corning three patents owned by Hartford. The
decree orders these payments impounded, but makes no disposition of the impounded fund. It
also requires Corning to reassign the patents to Hartford.
[***HR21] Two of the patents have expired. The reason for Corning's desire to obtain title to the
patents was that two of them were alleged to conflict with certain features of Corning's ribbon
machine n21 although the claim was always contested and never established. These are the two
expired patents. The third was alleged to infringe upon a feature of a Corning patented machine
known as a turret chain machine. Continued ownership of the patent by Hartford would constitute
a threat against [**391] the use by Corning of the machine. The assigned patent will expire six
years before Corning's patent on the turret chain machine. Naturally Corning desired to be free
from the possible threat of infringement suits. It does not appear that the ownership of this patent
by Corning would tend to perpetuate or create any improper monopoly or patent pool. In any
event, Corning has agreed, if such danger is found to exist, to dedicate the patent to the public,
since all it desires is to be free of restraint on the part of Hartford in the use of its turret chain
machine. Such dedication should be ordered.
- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n21 There is no claim that the ribbon machine patent was ever part of a combination of patents.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
[*422] In the light of these facts, the settlement made by Hartford and Corning ought not to be
set aside nor ought the payment to be made by Hartford to Corning thereunder be enjoined. The
money paid into court by Corning should be returned to it.
The paragraph orders cancellation of the agreements of June 30, 1916 between
Hartford-Fairmont and Empire, and that of October 26, 1922 between Hartford, Corning and
others. These have been cancelled, but the decree should enjoin their reinstatement, or the
making of like contracts in the future.
Paragraph 28 orders cancellation of all Hartford machinery leases now outstanding and requires
that each lessee be offered a new license (without royalty, pursuant to paragraph 24) and offered
the right to purchase all of the machinery now held under lease (as required by paragraph 23). In
view of what has been said this provision should not stand.
[***HR22] Paragraph 29 enjoins the insertion or enforcement of any provision in any agreement
heretofore or hereafter made by any of the appellants which (a) directly or indirectly limits or
restricts (1) the type or kind of product, whether glassware or any other, which can be produced
on [***367] machines or equipment or by processes embodying inventions licensed under patents
or patent applications, (2) the use of the product so produced, (3) the character, weight, color,
capacity, or composition of the product, (4) the quantity, (5) the market, either as to territory or
customers in or to which the product may be sold or distributed, (6) the price or terms of sale or
other disposition of the product, or (7) the use of the machinery or equipment distributed or the
inventions licensed in connection with any other machinery or equipment, or the use of it in any
specified plant or locality; (b) authorizes termination of the license for unauthorized use; (c)
provides that the licensee shall not contest the validity of [*423] any patent or patents of the
licensor; (d) provides that improvements by the licensee on machinery leased and sold shall
become the property of the lessor; (e) provides that rights to improvements and inventions
covering licensed machinery or processes or methods shall become the exclusive property of the
lessor or vendor; or (f) grants to any licensee a preferential position by lower rates of royalty, by
different provisions of licensing, leasing, or sale, by exclusive licensing, rebate, discounts or
requiring a share in net or gross income, or by any other means.
The paragraph now covers every kind of invention and every patent, present or future, in any
field if owned or controlled or distributed by an appellant.
The injunction will stop all inventions or acquirement of patents in any field by any appellant
unless for its own use in its business, for it sets such limitations upon the reward of a patent as to
make it practically worthless except for use by the owner. It is unlimited in time. It is not limited
to any joint action or conspiracy violative of the antitrust laws; it covers inventions in every
conceivable field.
The Government now agrees that this injunction should be limited to glassmaking machinery
and glassware as defined in paragraph 1 of the decree of the District Court.
The corporate appellants have amended, or agreed to amend, existing leases and licenses to
remove all such restrictions as are enjoined. n22 We have already said that the decree should
enforce conformity of all lease and license agreements to this standard, and forbid the
reinstatement or embodiment of any such restrictions in existing [*424] or future agreements
relating to the [**392]machinery, methods or processes respecting feeders, formers, stackers or
lehrs or involved in their use, covered by patents now owned or applied for or those hereafter
acquired by any corporate appellant.
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n22 The Government calls attention to findings which show that though Hartford advised
certain licensees of the removal of restrictions in their licenses, these licensees have not formally
accepted the more liberal terms. Hartford can be enjoined from enforcing the restrictions if that is
found necessary.
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Paragraph 29 should be amended to permit any appellant, corporate or individual, to retain and
refuse to license, to use and refuse to license, or to license with restrictions, any patent hereafter
applied for or acquired except those applicable to feeders, formers, stackers and lehrs and
processes and methods applicable thereto. Its restraints should be limited as we have indicated
those of paragraph 24 (b) should be limited.
Paragraph 30 applies all the terms of paragraph 29 to agreements hereafter made between any
of the defendants. This should be modified to conform to the alterations to be made in paragraph
29.
[***HR23] Paragraph 31 requires court approval of "any agreement between any of the
defendants" and "of any license agreement made pursuant to this judgment." This is too sweeping.
The provision is without limit of time and not terminable upon fulfilment of any condition. Many
of the individual defendants are employees [***368] of one of the corporate defendants. An
employment contract could not be made with such an one without court approval. Nor can any
defendant enter into the most innocent and usual business transaction with any other, however
unrelated to the conspiracy, without similar approval. This paragraph, if retained, should be
restricted in application to lease or license agreements and agreements respecting patents and
trade practices, production and trade relations.
[***HR24] By paragraph 33 each of the individual defendants is enjoined from "holding,
controlling, directly or indirectly, or through corporations, agents, trustees, representatives, or
nominees, any of the issued and outstanding capital stock, bonds, or other evidences of
indebtedness of more [*425] than one corporation engaged either in the manufacture and sale of
glassware or in the manufacture or distribution of machinery used in the manufacture of glassware
or in both. . . ." The individual defendants thus enjoined are officers and directors of the corporate
defendants. The purpose of dealing with stock ownership is to prevent aggregation of control to
the end of establishing a monopoly or stifling competition. The ownership of a few, or even a few
hundred, shares of stock of a glass manufacturing company not in competition with the company
of which a defendant happens to be a director or officer can have no tendency towards such a
result. Many food packers and makers of proprietary articles manufacture part or all of the
glassware in which their goods are sold. The decree would require all of the defendants, at their
peril, to part with any stock which they own in such a concern and to refrain from buying any.
Owens is in the glass container business. It has never manufactured pressed or blown ware or
light bulbs, yet the decree would forbid any defendant connected with Owens from investing in
any concern manufacturing these articles. It is unnecessary to multiply instances of the broad
sweep of the paragraph.
Moreover, the injunction is against ownership of bonds of any such company. It is difficult to
see how such ownership in any reasonable amount by any of the individuals in question could tend
towards a violation of the Sherman Act. The phrase "evidence of indebtedness" is also used. This
would indicate complete prohibition against making a loan however reasonable, or however
proper the purpose, evidenced by a promissory note.
The decree should be modified to prohibit acquisition of stocks or bonds of any corporate
appellant by any other such appellant, and to prohibit only the acquisition of a measure of control
through ownership of stocks or bonds or otherwise, by any individual in a company competing
[*426] with that with which he is officially connected or a subsidiary or affiliate of such
competing company.
[***HR25] The appellants Falck, Houghton, Houghton Jr. and Levis own substantial amounts of
stock of Corning and of Hartford. By the decree they are required to divest themselves of their
stock in the one or the other within two years from the date of the judgment. In view of the effect
of the decree on Hartford, it may prove difficult for these defendants to comply within the period
stated without severe loss. We are of opinion that a [**393] longer time should be allowed and
that an alternative provision would be appropriate depriving these defendants of the right to vote
the stock of one company or the other or to trustee the stock of one of the corporations if both
stocks are held longer than the term fixed.
Paragraph 34 which deals with present holdings of individual appellants should be revised to
comport with the views expressed as to paragraph 33.
[***HR26] [***HR27] Paragraph 35 enjoins each individual defendant from holding, at [***369]
the same time, an office or directorship in more than one corporation which manufactures and
sells glassware or manufactures or distributes glassmaking machinery. The injunction is not
limited to directorships in more than one of the defendant corporations. The same comment
applies as has been made with respect to paragraph 33. There may be many instances when the
normal freedom to act as a director of more than one company will in no wise conflict with the
policies of the antitrust laws or tend to the fostering of practices which those laws forbid. The
same considerations apply to paragraph 36-A and 36-B, which should be limited to the acquisition
of the business or assets of a competing corporation by a corporate defendant, and by any officer
of a corporate defendant, of the business or all the assets of a competing concern, unless the
acquisition is approved by the court.
[*427]
[***HR28] Paragraphs 37 to 39 are directed at the Glass Container Association, its officers,
directors, employes and members. The District Court has found that from 1928 to 1937 the
association, through the instrumentality of its statistical committee, on which the principal
corporate defendants were represented, furnished forecasts of probable future production of each
of the glass manufacturers concerned and that these forecasts were communicated at meetings of
the association by one manufacturer to another so that there was general knowledge amongst the
members of the forecasted future production of each of them. These forecasts, the court found,
were treated by the corporate appellants and their officers as in fact quotas, deviation from such
quotas was discouraged, and it was the general understanding that each manufacturer should
restrict his production to accord with his quota. The court further found that the association,
working in close cooperation with Hartford, which was not a member, endeavored to discourage
expansion of the industry and to prevent increased competition through the entry of new units into
the various fields of manufacture of glass containers.
The court, in its opinion, indicates that it does not find it necessary to dissolve the association
and further indicates that it may serve a valuable purpose to the industry "as a statistical and
research body" and in the promotion of better methods of manufacture and distribution.
The injunctions entered in paragraphs 37 to 39, inclusive, compel the association to abolish its
statistical committee and to refrain from establishing any committee with similar functions; enjoin
it from retaining any of its present officers or board of directors who are defendants and also
directors, officers or employes of any defendant corporation, and order it to submit to the
Attorney General and to the court the names of directors or officers to be elected or appointed to
succeed present incumbents. The association is enjoined from electing, [*428] employing, or
continuing in office or employment, anyone who is, at the time, an officer, director, agent or
employe of the corporate appellants, and is required to amend its charter and by-laws to prevent
such employment.
We think the injunction as respects the association, while leaving it in existence, practically
destroys its functioning, even as an innocent trade association for what have been held lawful
ends. n23 The association has undoubtedly been an important instrument of restraint and
monopoly. [***370]It may be made such again, and detection and prevention and punishment
[**394] for such resumption of violations of law may be difficult if not impossible. In the light of
the record, we think it better to order its dissolution, and to provide that the corporate defendants
be restrained for a period of five years from forming or joining any such trade association, and
that thereafter they may apply for leave to do so, and have such leave on showing to the court
that the purposes and activities of the proposed body will not be violative of law.
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n23 See Maple Flooring Manufacturers Association v. United States, 268 U.S. 563, 582, 583;
Cement Manufacturers Protective Association v. United States, 268 U.S. 588, 606; Appalachian
Coals v. United States, 288 U.S. 344, 374; Sugar Institute v. United States, 297 U.S. 553, 598.
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[***HR29] Paragraph 40 is a general injunction against future conduct. It is designed to prevent
combinations, in violation of the antitrust statutes. It names each corporate defendant "and the
individual defendants associated therewith" meaning the officers and directors of each who are
found to have participated in the conspiracy. But an injunction binding the corporate defendants,
their officers, agents and employes, is sufficient to constrain the individual defendants so long as
they remain in official relation, and to bind their successors. It is unnecessary to enjoin them
personally, when that relation is severed.
[*429] Sub-paragraph (1) prohibits combining with any other defendant or with any other
manufacturer or "seller" of glassware or glass machinery. The appellants object to the inclusion of
the word "seller," claiming that the use of this term may preclude normal business arrangements
with agents and consignees. We shall later indicate the proviso we think necessary in this
connection. We are of opinion that the sub-paragraph should be amended by exscinding the
phrase "its directors, officers, agents, and employees" in both clauses, and inserting the words
"whether a natural person, partnership or corporation" after the word "glassware" appearing in
the last line of the printed draft of the decree furnished this court by the appellants.
Sub-paragraph (b) should be amended by inserting the word "a" between "of" and
"manufacturers" (which should be in the singular) in the first line of the same draft, deleting the
words "or effect thereof" in the sixth line and inserting in lieu thereof "of such ascertainment,
estimate or forecast" and by inserting in the next line between the words "persuade" and "any" the
words "or agree with".
Sub-paragraph (c) should be amended to substitute in the sixth line of the same draft for "or
where" the word "with" and for "or effect is" the words "or agreement".
[***HR30] Sub-paragraph (d) should be deleted. The requirement that all trade information be
given to the public would render the assembly of it for the information of members useless and
indeed detrimental to competition. The inclusion of such a provision in an antitrust decree has
been disapproved by this court.
Paragraph (2) should be modified by adding at the end "in the distribution of glassware or
machinery for the manufacture of glassware".
Paragraph (3) which deals with distribution of data concerning the business of glassmaking and
glass machinery [*430] distribution is approved with these alterations: after the word "otherwise"
in the seventh line of the draft there should be inserted the words "pursuant to any agreement or
understanding or with the purpose or intent" and there should be deleted the words "in such form
or manner as to indicate"; after the word "machinery" in the next to last line, the sentence should
read, "shall limit his or its output to any production quota or shall adhere or conform to any
price".
[***HR31] In order to permit usual business transactions not related to violations of the antitrust
statutes there should be added at the end of paragraph [***371] 40 a proviso that nothing in the
paragraph is to be construed to forbid normal business transactions of any of the corporate
defendants with its selling agents or consignees, persons or corporations rendering services to it,
or customers; or to prohibit transactions with citizens or corporations of foreign nations; or to
prevent any defendant from availing of the benefits of the Webb-Pomerene Act, the Small
Business Mobilization Act or (save as elsewhere in the decree provided) of the benefits of the
patent laws.
Paragraphs 41 and 42 are duplications of other provisions of the decree. They should be
deleted.
Paragraph 51 enjoins all defendants from directly or indirectly acquiring, otherwise than through
direct issue from the patent office, any patent, patent application, or exclusive rights thereunder,
covering any invention embodied or employed [**395] in a machine or process used, or to be
used, in glassware manufacture ("whether or not the machine or process embodying or employing
the invention covered by the patent can be used without infringing another patent or patents")
which constitutes or employs, in whole or in part, a method, means, or process to obtain results in
the glassmaking art which is identical with, similar or alternative to, those obtained or obtainable
by the machinery, methods, or processes embodying [*431] inventions covered by patents then
owned or controlled by any defendant, except non-exclusive rights or patents on inventions of its
or his employes or those of a subsidiary, made during the time of employment.
The scope of the provision is not clear. Whether it applies to an improvement upon an existing
patented invention seems doubtful. Perhaps it does not prevent an owner of a patent upon a
feeder from acquiring one upon a former, or an owner of a patent upon a stacker from acquiring
one upon a lehr, but, as the provision is framed, this is not clear. The injunction seems in effect to
forbid acquisition by any defendant of any patent right in any glassmaking field, for most of the
corporate defendants, and perhaps some of the individuals, now own some such patent.
[***HR32] It is clear, however, that the paragraph enjoins all acquisition of patent rights other
than non-exclusive licenses. In this respect, it is the reverse of paragraph 29 which outlaws all
grants except unrestricted non-exclusive licences. It will be noted that the injunction runs against
each defendant individually and is not applicable to joint acquisitions or to combinations or
agreements respecting acquisition. It seems to prohibit the acquisition of any patent, or of a
restricted license under any patent by any defendant. In this respect the paragraph is inappropriate
to restrain future violations of the antitrust statutes. The paragraph should be deleted.
[***HR33] Paragraph 52 deals with the problem of suppressed or unworked patents. Much is
said in the opinion below, and in the briefs, about the practice of the appellants in applying for
patents to "block off" or "fence in" competing inventions. In the cooperative effort of certain of
the appellants to obtain dominance in the field of patented glassmaking machinery, many patents
were applied for to prevent others from obtaining patents on improvements which might, to some
extent, limit the return in the way [*432] of royalty on original or fundamental inventions. The
decree should restrain agreements and combinations with this object. But it is another matter to
restrain every defendant, for the indefinite future, from attempting to patent improvements of
machines or processes previously patented and then owned by such defendant. This paragraph is,
in our judgment, too broad. In effect it prohibits several of the corporate defendants from
applying for patents covering their own inventions in the art of glassmaking. [***372] For reasons
elsewhere elaborated it cannot be sustained. It should be limited as we have suggested that
paragraphs 24 (b) and 29 be limited. In addition, it enjoins every defendant from applying for a
patent "with the intention of not making commercial use of the invention within four years" from
issue of the patent and makes the failure commercially to use the invention prima facie proof of
the absence (sic) of such intention. n24 This provision is also legislative rather than remedial.
Unless we are to overturn settled principles the paragraph in question must be eliminated.
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n24 The Government suggests that the paragraph should be revised to read: "with the intention
of never making commercial use of the inventions covered thereby, provided that failure to make
such use within four years from the date of issuance of patents thereon shall be deemed prima
facie proof of the presence of such intention at the time of the filing or prosecution of such
applications."
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A patent owner is not in the position of a quasi-trustee for the public or under any obligation to
see that the public acquires the free right to use the invention. He has no obligation either to use it
or to grant its use to others. If he discloses the invention in his application so that it will come into
the public domain at the end of the 17-year period of exclusive right he has fulfilled the only
obligation imposed by the statute. n25 This has been settled doctrine [*433] since at least 1896.
Congress has repeatedly been asked, [**396]and has refused, to change the statutory policy by
imposing a forfeiture n26 or by a provision for compulsory licensing n27 if the patent is not used
within a specified time. The governing rule is quoted in Chapman v. Wintroath, 252 U.S. 126, at
137:
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n25 United States v. Bell Tel. Co., 167 U.S. 224, 249; Continental Paper Bag Co. v. Eastern
Paper Bag Co., 210 U.S. 405, 424, 429, 430.
n26 H. R. 13876, 62d Cong., 1st Sess. (1911); H. R. 22203, 62d Cong., 2d Sess. (1912); S.
3297, 67th Cong., 2d Sess. (1922); H. R. 6864, 75th Cong., 1st Sess. (1937).
n27 S. 3325, 67th Cong., 2d Sess. (1922); S. 3474, 69th Cong., 1st Sess. (1926); S. 705, 70th
Cong., 1st Sess. (1927); S. 203, 71st Cong., 1st Sess. (1929); S. 22, 72d Cong., 1st Sess. (1931);
S. 290, 73d Cong., 1st Sess. (1933); S. 383, 74th Cong., 1st Sess. (1935); S. 2491, 77th Cong.,
2d Sess. (1942).
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"'A party seeking a right under the patent statutes may avail himself of all their provisions, and
the courts may not deny him the benefit of a single one. These are questions not of natural but of
purely statutory right. Congress, instead of fixing seventeen, had the power to fix thirty years as
the life of a patent. No court can disregard any statutory provisions in respect to these matters on
the ground that in its judgment they are unwise or prejudicial to the interests of the public.' United
States v. American Bell Telephone Co., 167 U.S. 224, 247."
Paragraph 55 requires submission to certain investigations by the Department of Justice and the
furnishing of information with respect to the business of the corporate defendants in the future. It
should be modified to accord with our opinion in United States v. Bausch & Lomb Co., 321 U.S.
707, which involved a similar provision.
A word should be said concerning the inclusion in many paragraphs of the decree, and in many
of the injunctions imposed, of various individual defendants who in the past have acted as, and
who at present are, officers or directors of the corporate defendants. They offended against
[*434] the antitrust laws by acting on behalf of, or in the name of, a corporate defendant. There
are no findings, and we assume there is no evidence, that any of them have applied for, owned,
dealt in, and licensed patents appertaining to the glassware art. Nor is there evidence [***373] or
finding that, as individuals acting for their own account, any of them, as a principal, has entered
into any of the arrangements found unlawful by the court. Despite these facts, in practically every
instance where a corporate defendant is restrained from described action or conduct, these
individuals, as individuals, are likewise restrained. Any injunction addressed to a corporate
defendant may, as various sections of the decree do, include its officers and agents. If the
individual defendants are officers or agents they will be comprehended as such by the terms of the
injunction. If any of them cease to be such, no reason is apparent why he may not proceed, like
other individuals, to prosecute whatever lawful business he chooses free of the restraint of an
injunction. On the other hand, if new officers and directors take the places of these defendants,
such new agents will automatically come under the terms of the injunction. There is no apparent
necessity for including them individually in each paragraph of the decree which is applicable to the
corporate defendants whose agreements and cooperation constitute the gravamen of the
complaint. That these individuals may have rendered themselves liable to prosecution n28 by
virtue of the provisions of @ 14 of the Clayton Act n29 is beside the point, [*435] since relief in
equity is remedial, not penal. These considerations, however, do not apply to the provisions of
paragraphs 3 to 7 and 33 to 35 inclusive, as the same are to be modified.
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n28 United States v. Socony-Vacuum Oil Co., 23 F.Supp. 937, affirmed 310 U.S. 150.
n29 38 Stat. 736; 15 U. S. C. @ 24. "That whenever a corporation shall violate any of the penal
provisions of the antitrust laws, such violation shall be deemed to be also that of the individual
directors, officers, or agents of such corporation who shall have authorized, ordered, or done any
of the acts constituting in whole or in part such violation, and such violation shall be deemed a
misdemeanor . . ."
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Paragraph 42 requires Ball to cancel certain agreements with the Knox Glass Bottle Company
and Underwood, and with [**397] Brockway Machine Bottle Company and Robert L. Warren,
which excluded the parties named from entering the glass container business for periods of years.
As it appears without contradiction that these restrictions have already been released by Ball, the
paragraph seems unnecessary.
The judgment of the District Court is reversed as to the appellants in Nos. 10 and 11; its
decision that the appellants in the other appeals have violated the antitrust laws and should be
enjoined from future similar violations is affirmed, but the decree entered is vacated and the cause
is remanded for further proceedings in conformity to this opinion.
MR. JUSTICE DOUGLAS, MR. JUSTICE MURPHY and MR. JUSTICE JACKSON took no
part in the consideration or decision of this case.
DISSENTBY: BLACK (In Part); RUTLEDGE (In Part)
DISSENT: MR. JUSTICE BLACK, dissenting in part.
I agree with the Court's judgment insofar as it sustains the decree of the District Judge.
I cannot, however, agree to many of the modifications of that decree. These appellants have
violated the anti-trust laws. The District Court's decree, taken as a whole, is an effective remedy,
admirably suited to neutralize the consequences of such violations, to guard against repetition of
similar illegal activities, and to dissipate the unlawful aggregate of economic power which arose
out of, and fed upon, monopolization and restraints. United States v. Crescent Amusement Co.,
323 U.S. 173. Many [*436] of this Court's modifications seriously impair the decree and frustrate
its purposes.
It would probably serve no useful purpose to state at length the reasons which justify the
District [***374] Court's decree, since they are set forth clearly and well in its opinion. In
particular, however, it is my belief that any reasonable assurance that these appellants will not
continue to violate the anti-trust law requires that we leave intact the District Court's decree
insofar as it (1) provides for appointment of a receiver and the impounding of Hartford's royalties
(Paragraphs 10-20 of the Decree); (2) requires that glassware machines should be disposed of by
outright sale rather than by leases (Paragraphs 21, 22, 23); (3) requires that patents, already
owned, be licensed royalty free; (4) prohibits the restrictive licensing practices which the
appellants so effectively used to create and maintain their monopoly (Paragraph 29); (5) enjoins
the appellants from the practice of obtaining patents for the purpose of "fencing in" and "blocking
off" new inventions, (Paragraph 52).
The District Court's opinion in my judgment laid a careful and well-reasoned foundation
establishing the necessity for every one of these Paragraphs. It would be difficult to add to what
the court there said. It is sufficient for me to say only a few words.
The District Court found that these defendants started out in 1916 to acquire a monopoly on a
large segment of the glass industry. Their efforts were rewarded by complete success. They have
become absolute masters of that domain of our public economy. They achieved this result largely
through the manipulation of patents and licensing agreements. They obtained patents for the
express purpose of furthering their monopoly. They utilized various types of restrictions in
connection with leasing those patents so as to retain their dominance in that industry. The history
of this country has perhaps never witnessed a more completely successful economic tyranny
[*437] over any field of industry than that accomplished by these appellants. They planned their
monopolistic program on the basis of getting and keeping and using patents, which they dedicated
to the destruction of free competition in the glass container industry. Their declared object was
"To block the development of machines which might be constructed by others . . ." and "To
secure patents on possible improvements of competing machines, so as to 'fence in' those and
prevent their reaching an improved state." These patents were the major weapons in the campaign
to subjugate the industry; they were also the fruits of appellants' victory. The restoration of
competition in the glass container industry demands that appellants be deprived of these weapons.
The most effective way to accomplish this end is to require, as the District Court did, that these
patents be licensed royalty free.
[**398] The decree of the court below was well fashioned to prevent a continuation of
appellants' monopolistic practices. The decree as modified leaves them free, in a large measure, to
continue to follow the competition-destroying methods by which they achieved control of the
industry. In fact, they have received much milder treatment from this Court than they anticipated.
This is shown by a memorandum of one of Hartford's officers made in 1925. That memorandum
which discussed plans for suppression of a number of competitors, with particular reference to
possible prosecutions under the Sherman Act, read in part as follows:
"Of course, the court might order that we transfer the entire Federal licensing business to some
other party and turn over to that party the Federal patents. This, of course, would simply restore
to a certain extent the existing situation and establish a competitor. . . . I . . . do not see much
danger of having any of these deals upset. . . . If they are upset, I still believe that by that time,
we will be in a better position even with such dissolution than we would be otherwise; and I see
no danger whatsoever [*438] of any criminal [***375]liability because the cases are necessarily
so doubtful in the matter of law that they could never get any jury to convict and I doubt if any
prosecuting officer would ever attempt any criminal action. Criminal action in cases of this sort,
so far, has practically been nonexistent."
I would sustain the decree of the District Court, for the reasons it gave, in all of the paragraphs
mentioned.
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. n1 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 [*439] success of this long adventure in
monopoly and unlawful restraint of trade. n2 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, n3 and in other published [**399]documents. n4
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n1 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.
n2 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.
n3 Characterizing the case 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 first-hand information of what the
parties did and intended than in the case at bar." (P. 553.)
n4 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).
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[*440] [***376] This 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 [*441] offense; 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 [***377] limitations courts of equity traditionally have put around their action in
private litigation. [**400] 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 [*442] function 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. n5
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. [*443] Many of the patents,
and certainly the cherished "patent position," n6 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. n7 Merely to throw off the illegal practices, such as
restricted and discriminatory licensing, cannot [***378] 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 [**401] methods. It, and the constituent members, will continue
to enjoy the preferred competitive position [*444] which 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. n8
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n5 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 case 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.)
n6 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."
n7 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.)
n8 Cf. notes 13 and 17 infra.
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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 evidence n9 to sustain its conclusion:
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n9 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.
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"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 benefits [*445]of their unlawful actions. The court intends to make
certain that this does not occur." n10 (P. 620.)
The Government had requested the dissolution of Hartford, keystone of the combination. n11 In
view of controlling authorities relating to violations not less extensive or more clearly proved, n12
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:
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n10 Cf. notes 2 and 13.
n11 Unless, in fact, this were Corning, 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 Corning's wishes." (P.
557.)
n12 Standard Oil Co. v. United States, 221 U.S. 1; United States v. American Tobacco Co.,
221 U.S. 106.
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"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 [***379]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 [*446] knowledge 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 Corning's monopolies regardless of the outcome of this suit"; n13
second, to prevent any further abuse of the [**402] 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 [*447] to 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.)
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n13 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 Corning'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.
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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. n14 - - - - - - - - - - - - - - - - -
-Footnotes- - - - - - - - - - - - - - - - - -
n14 Cf. note 13 supra.
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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 [***380] 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 [*448] question 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, [**403]
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 [*449] most 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." n15 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.
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n15 Cf. note 2 supra.
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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. n16 The holder of a patent who observes the [***381] 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 [*450] measures 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.
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n16 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."
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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. n17 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.
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n17 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.
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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
[**404] was drastic and there is no other way now, short of dissolution or cancellation, [*451] to
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.
n18
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n18 Even a disposition so guarded would realize for the owner the fruit of his wrongdoing in
the case 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.
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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 [***382] 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, [*452] contrary 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 ordinarily [*453] has been done in infringement suits n19 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 anti-trust legislation, and does this in such a way that
[**405] 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.
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n19 Cf. Morton Salt Co. v. Suppiger Co., 314 U.S. 488; Mercoid Corp. v. Mid-Continent
Investment Co., 320 U.S. 661.
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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 [***383] 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.
MR. JUSTICE BLACK joins in this dissent.