U.S. Supreme Court
United States v. National Lead Co., 332 U.S. 319 (1947)
United States v. National Lead Co.
Argued February 3-5, 1947
Decided June 23, 1947
332 U.S. 319
1. In a suit to enjoin violations of §§ 1 and 2 of the Sherman Antitrust Act, the District Court found that defendants had participated in an "international cartel" constituting a combination or conspiracy in restraint of trade and commerce in titanium products among the several states of the United States and with foreign nations through the pooling of patents and the allocation of markets and that they had been and still were parties to agreements in restraint of such trade and commerce in violation of § 1 of the Sherman Act.
(a) Counsel for two of the defendants having accepted cancellation of the agreements and an injunction against their continuation or renewal, this Court accepts without discussion the District Court's finding that these two defendants participated since 1920 in the cartel in violation of § 1 of the Sherman Act. Pp. 332 U. S. 325-326.
(b) This Court sustains the finding of the District Court that the third defendant participated in such illegal combination after 1933. Pp. 332 U. S. 326-327.
(c) This Court sustains the finding of the District Court that the contract between two of the defendants, under which they utilized their patents to control and regulate the manufacture and sale of titanium products in the United States, was offensive to the antitrust laws apart from the relation of that contract, and of the parties thereto, to foreign producers. Pp. 332 U. S. 327-328.
2. The District Court adjudged unlawful and canceled certain agreements between defendants and between them and various coconspirators; enjoined further performance, continuation, or renewal of such agreements; enjoined defendants from entering into similar agreements in the future; ordered defendants to grant to any applicant therefor a nonexclusive license under certain patents at a uniform reasonable royalty; authorized reciprocal licenses on certain terms; ordered certain defendants to present to the court for its chanroblesvirtualawlibrary
approval a plan for divesting themselves of their stockholdings and other financial interests in certain other companies or for the purchase of the entire stockholdings and other financial interests in such companies; retained jurisdiction, and provided for supervision.
Held: this decree did not exceed the District Court's discretion. Pp. 332 U. S. 328-335.
(a) To a large extent, the provisions of this decree are matters lying in the discretion of the District Court. P. 332 U. S. 334.
(b) The District Court was confronted with an obligation to give effect, on the one hand, to the provisions of the patent laws granting certain valuable rights in the nature of monopolies and, on the other hand, to the provisions of the Sherman Act prohibiting any combination or conspiracy in restraint of trade. Pp. 332 U. S. 334-335.
(c) The essential consideration is that the remedy shall be as effective and fair as possible in preventing continued or future violations of the Sherman Act in the light of the facts of the particular case. P. 332 U. S. 335.
3. The decree should not be modified so as to provide for compulsory royalty-free licenses or so as to enjoin the patentees or licensees from enforcing the terms of the patents involved . Pp. 332 U. S. 335-351.
(a) Without reaching the question whether royalty-free licensing or a perpetual injunction against the enforcement of a patent is permissible as a matter of law in any case, the present decree represents an exercise of sound judicial discretion. P. 332 U. S. 338.
(c) On the facts of this case, such a modification of the decree has not been shown to be necessary in order to enforce effectively the Antitrust Act. Pp. 338-349.
(d) To reduce all royalties automatically to zero, regardless of their nature and regardless of their number, appears, on its face, to be inequitable without special proof to support such a conclusion. P. 332 U. S. 349.
(e) What will be "reasonable royalties" will depend upon the facts of each case. P. 332 U. S. 349.
(f) Under its decree, the District Court retains sufficient jurisdiction to enable it to vacate or modify its orders fixing reasonable royalty rates if it finds such action to be necessary or appropriate. P. 332 U. S. 351.
4. On the facts of this case, there was neither precedent nor good reason for a requirement (requested by the Government and denied by the District Court) that National Lead and du Pont each submit chanroblesvirtualawlibrary
a plan for the divestiture of one of its two principal titanium pigment plants, together with the related physical properties. Pp. 332 U. S. 351-353.
(a) The existing vigorous competition between these two defendants suggested that the District Court would do well to remove unlawful handicaps from it but demonstrates no sufficient basis for wese two defendants suggested that the District Court would do well to remove unlawful handicaps from it but demonstrates no sufficient basis for wese two defendants suggested that the District Court would do well to remove unlawful handicaps from it but demonstrates no sufficient basis for weakening its force by divesting each of the two largest competitors of one of its principal plants. Pp. 332 U. S. 352-353.
(b) It is not for the courts to realign and redirect effective and lawful competition where it already exists and needs only to be released from restraints that violate the antitrust laws. P. 332 U. S. 353.
(c) To separate the operating units of going concerns without more supporting evidence than has been presented here to establish either the need or the feasibility of it would amount to an abuse of discretion. P. 332 U. S. 353.
5. The District Court did not exceed its discretion in requiring that, during a period of three years, defendants make available to licensees under their patents at a reasonable charge, certain information in writing as to the methods and processes used by the licensor at the date of licensing. Hartford-Empire Co. v. United States, 323 U. S. 386, 323 U. S. 413, 323 U. S. 418, distinguished. Pp. 332 U. S. 353-358.
(a) The justification for the compulsory imparting of methods and processes rests upon its appropriateness and upon the necessity for it in providing an effective decree -- not upon a punitive purpose. P. 332 U. S. 357.
(b) Since the public interest requires that the court be permitted to produce the most effective and generally fair decree that it can devise to give effect simultaneously to the antitrust laws and the patent laws, the decree represents a permissible exercise of judicial discretion -- even though it includes, within narrow limits, disclosure of technical information by one defendant to another defendant which is its leading competitor. Pp. 332 U. S. 358-359.
6. The District Court did not exceed its discretion in denying the Government's request that there be substituted a requirement that defendants furnish to any applicant at a reasonable charge, during the period of three years, technical information desired by the applicant relating to the methods and processes for manufacturing titanium pigments. Pp. 332 U. S. 353, 332 U. S. 359.
(a) The decree is within the permissible breadth of the District Court's discretion over the conditions under which technical information shall be required to be shared with the world. P. 332 U. S. 359.
(b) The proposal to throw the field of technical knowledge in this field wide open would discourage, rather than encourage, chanroblesvirtualawlibrary
competitive research, and thus would be contrary to, rather than in conformity with, the present policy of the patent laws. P. 332 U. S. 359.
7. The District Court did not exceed its discretion in denying the Government's request that there be omitted from the decree a provision that defendants may make the grant of any license by either of them to an applicant under the decree conditioned upon the reciprocal grant of a license by the applicant at a reasonable royalty, under certain described patents owned or controlled by such applicant. Pp. 332 U. S. 359-360.
8. The Government's request to omit the six-months' time limit imposed by the decree upon the options of certain corporations to secure certain licenses under the decree need not be granted, since the new effective date to be given the decree pursuant to the order of this Court will allow ample time for the exercise of this option under its terms. Pp. 332 U. S. 360-361.
9. The District Court did not exceed its discretion in denying the request of a defendant to modify the decree so as to eliminate language which, the defendant claimed, forbids normal and usual business arrangements between the defendant and other producers of titanium products. Pp. 332 U. S. 361-363.
(a) This provision deals solely with the future enforceability of existing contracts which have been found to violate the Sherman Act, and it imposes no unjustified restriction on defendant's power to contract. P. 332 U. S. 362.
(b) If defendant later can demonstrate that its right of contract has been unduly restricted, it may, under the terms of the decree, apply to the District Court for a modification. P. 332 U. S. 363.
10. The acquisition by defendants of stock and other financial interests in certain foreign companies having been part and parcel of unlawful territorial allocation agreements, the future performance of which has been enjoined, the District Court did not exceed its discretion in decreeing that, within one year, defendants shall present to the District Court for its approval a plan for divesting themselves of their stockholdings and other financial interests in such foreign companies or for the purchase of the entire stockholdings and interests, direct or indirect, therein. P. 332 U. S. 363.
11. In view of the stay granted by a Justice of this Court suspending certain provisions of the decree pending determination of these appeals, the decree shall be deemed, for the purposes of those paragraphs and for the running of time thereon, to take effect on the effective date of the mandate to be issued by this Court. Pp. 332 U. S. 363-364.
63 F.Supp. 513 affirmed. chanroblesvirtualawlibrary
In a proceeding in equity instituted under § 4 of the Sherman Antitrust Act, the District Court found that defendants had violated § 1 of the Act and issued a decree to prevent and restrain further violations. 63 F.Supp. 513. Both the Government and the defendants appealed. Affirmed, p. 332 U. S. 364.