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U.S. Supreme Court

United States v. Masonite Corp., 316 U.S. 265 (1942)

United States v. Masonite Corporation

No. 723

Argued April 9, 10, 1942

Decided May 11, 1942

316 U.S. 265


1. A price-fixing combination of competitors in interstate trade violates the Sherman Act. P. 316 U. S. 274.

2. Acceptance by competitors, without previous agreement, of an invitation to participate in a plan, the necessary consequence of which, if carried out, will be restraint of interstate commerce renders them liable as conspirators under the Sherman Act. P. 316 U. S. 275.

The fixing of prices by one member of a group pursuant to express delegation, acquiescence, or understanding of the others is no less illegal than if done by their direct joint action. P. 316 U. S. 276. chanroblesvirtualawlibrary

Page 316 U. S. 266

4. A combination fixing prices in interstate commerce cannot be justified by business reasons or by its tendency to increase distribution of the commodity without increase of price to consumers, or by its tendency to promote competition between dealers. P. 316 U. S. 276.

5. A patent affords no immunity for a monopoly not plainly within the grant, and the grant cannot be extended by contract. P. 316 U. S. 277.

6. When a patented article is disposed of to a purchaser, it passes beyond the monopoly protected by the patent law. P. 316 U. S. 277.

7. A determination as to whether a particular disposition of a patented article exhausts the patent monopoly is not governed by the form of the transaction, but depends upon whether there has been such a disposition that it may fairly be said the patentee has received his reward for the use of the article. P. 316 U. S. 278.

8. In making such a determination, regard must be had for the dominant concern of the patent system, viz., promotion of the progress of science and the useful arts; the reward to the inventor is secondary, and merely a means to an end. P. 316 U. S. 278.

9. The scope of the patentee's statutory right to "vend" cannot be determined by the private law of sales alone. Such rights must be strictly construed, since patents are privileges restrictive of a free economy. P. 316 U. S. 280.

10. Numerous corporations which were in active competition with each other as dealers in building materials entered into a combination whereby one of them, which manufactured and sold material called "hardboard" for which it held a patent, undertook to constitute the others its del credere agents for the sale of that product through their respective sales organizations at prices fixed by the patent owner. Held, that this arrangement went beyond the patent privilege and violated the Sherman Act. United States v. General Electric Co., 272 U. S. 476, distinguished. Pp. 316 U. S. 280, 316 U. S. 282.

40 F.Supp. 852 reversed.

Appeal from a decree of the District Court which dismissed a bill brought by the United States under the Sherman Act. chanroblesvirtualawlibrary

Page 316 U. S. 267

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