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    which us supreme court judgment held that the plan of the conspiracy to control prices and distribution was not within the protection of the patent monopoly?

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    United States v. United States Gypsum Co. :: 333 U.S. 364 (1948) :: Justia US Supreme Court Center

    United States v. United States Gypsum Co.

    United States v. United States Gypsum Co., 333 U.S. 364 (1948)

    Syllabus Case

    U.S. Supreme Court

    United States v. United States Gypsum Co., 333 U.S. 364 (1948)United States v. United States Gypsum Co.No. 13Argued November 14-15, 1947Decided March 8, 1948333 U.S. 364

    Syllabus

    A complaint in a suit by the United States to restrain alleged violations of the Sherman Act charged that the defendants had violated §§ 1 and 2 of the Act by a conspiracy to restrain and monopolize interstate trade in gypsum products. It alleged that the defendants acted in concert in entering into patent licensing agreements; that one of the defendants, dominant in the industry, granted patent licenses and the other defendants accepted licenses with the knowledge that all other concerns in the industry would accept similar licenses and that, as a result of such concert of action, competition was eliminated by fixing the price of patented board, eliminating the production of unpatented board, regulating the distribution of patented board, and stabilizing the price of unpatented plaster. Upon conclusion of the Government's case, the District Court granted the defendants' motion to dismiss. On direct appeal to this Court,

    Held:

    1. The evidence established a violation of the Sherman Act. Pp. 333 U. S. 368-386, 333 U. S. 388-393, 333 U. S. 400-402.

    2. The plan of the conspiracy to control prices and distribution was not within the protection of the patent monopoly. United State v. General Electric Co., 272 U. S. 476, distinguished. Pp. 333 U. S. 389-391, 333 U. S. 400-402.

    3. The industry-wide license agreements, entered into with knowledge on the part of licensor and licensees of the adherence of others, under which control was exercised over prices and methods of distribution, were sufficient to establish a prima facie case of conspiracy. Pp. 333 U. S. 388-389.

    4. Patent exploitation of the kind here attempted is within the prohibition of the Sherman Act, regardless of the motives of the participants. Pp. 333 U. S. 391-393.

    5. With the conspiracy fully established, the declarations and acts of the various participants, even though made or done prior to the adherence of some to the conspiracy, became admissible against all as declarations or acts of co-conspirators in aid of the conspiracy. Pp. 333 U. S. 388-393.

    Page 333 U. S. 365

    6. When a group of competitors enters into a series of separate but similar agreements with competitors or others, a strong inference arises that such agreements are the result of concerted action. P. 333 U. S. 394.

    7. Under Rule 52(a) of the Rules of Civil Procedure, a finding of fact by the trial court is "clearly erroneous" when, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. Pp. 333 U. S. 394-395.

    8. Where denials by alleged conspirators that they had acted in concert are in conflict with documentary evidence, they can be given little weight, particularly when the crucial issues involve mixed questions of fact and law. Pp. 333 U. S. 395-396.

    9. The finding by the trial court that defendants had not associated themselves in a plan to blanket the industry under patent licenses and stabilize prices is set aside as clearly erroneous. Pp. 333 U. S. 393-394.

    10. The provision in the patent licensing agreements for payment of royalties on the production of unpatented board is strongly indicative of an agreement not to manufacture unpatented board; and the testimony in this case is ample to show that there was an understanding, if not a formal agreement, that only patented board would be sold. Such an arrangement in purpose and effect increased the area of the patent monopoly, and is invalid. P. 333 U. S. 397.

    11. Where the purpose is to prevent competition by uncontrolled resale prices, an arrangement for the elimination of jobbers does not fall within the protection of the patent grant. Findings by the trial court that defendants had not conspired to eliminate jobbers are here set aside. Pp. 333 U. S. 397-398.

    12. Findings by the trial court that defendants had not stabilized the price of unpatented plaster sold in conjunction with patented board are here set aside. Pp. 333 U. S. 398-399.

    13. The General Electric case does not authorize a patentee, acting in concert with all members of an industry, to issue substantially identical licenses to all members of the industry under the terms of which an industry is completely regimented, the production of competitive unpatented products suppressed, a class of distributors squeezed out, and prices on unpatented products stabilized. Pp. 333 U. S. 400-401.

    14. The "rule of reason" is applicable to efforts to monopolize through patents. Pp. 333 U. S. 400-401.

    15. Even in the absence of the specific abuses in this case, which fall within the traditional prohibitions of the Sherman Act, it

    Page 333 U. S. 366

    would be sufficient to show that the defendants, constituting all former competitors in an entire industry, had acted in concert to restrain commerce in the industry under patent licenses in order to organize the industry and stabilize prices. P. 333 U. S. 401.

    16. In a suit to restrain alleged violations of the Sherman Act, in which the defendants rely upon patents, the Government is entitled to an opportunity to prove that the patents are invalid. Pp. 333 U. S. 386-388.

    स्रोत : supreme.justia.com

    The Antitrust Laws and Monopoly on JSTOR

    Edward H. Levi, The Antitrust Laws and Monopoly, The University of Chicago Law Review, Vol. 14, No. 2 (Feb., 1947), pp. 153-183

    Skip to Main Content

    स्रोत : www.jstor.org

    Chapter 5 : Antitrust Issues In The Tying And Bundling Of Intellectual Property Rights

    Chapter 5 : Antitrust Issues In The Tying And Bundling Of Intellectual Property Rights

    This document is available in three formats: this web page (for browsing content), PDF (comparable to original document formatting), and WordPerfect. To view the PDF you will need Acrobat Reader, which may be downloaded from the Adobe site. For an official signed copy, please contact the Antitrust Documents Group.

    CHAPTER 5: ANTITRUST ISSUES IN THE TYING AND BUNDLING OF INTELLECTUAL PROPERTY RIGHTS

    Introduction

    Legal Analyses of Tying and Bundling

    Tying and Bundling Involving Intellectual Property

    The Economics of Bundling Involving Intellectual Property

    Legal Issues Relevant to Intellectual Property Bundling

    Practical Issues Regarding Intellectual Property Bundling

    Suggested Approaches to Improving the Law on Intellectual Property Bundling

    Conclusion

    CHAPTER 5ANTITRUST ISSUES IN THE TYING AND BUNDLINGOF INTELLECTUAL PROPERTY RIGHTSI. INTRODUCTION

    "Tying and bundling [are] so ubiquitous that we forget they are there . . . . Tying and bundling [are], roughly speaking, what the modern firm does. It's the rationale. It puts things together and offers them in packages to consumers."(1)

    A tying arrangement occurs when, through a contractual or technological requirement, a seller conditions the sale or lease of one product or service on the customer's agreement to take a second product or service.(2) The term "tying" is most often used by economists when the proportion in which the customer purchases the two products is not fixed or specified at the time of purchase, as in a "requirements tie-in" sale.(3) A bundled sale typically refers to a sale in which the products are sold only in fixed proportions (e.g., one pair of shoes and one pair of shoe laces or a newspaper, which can be viewed as a bundle of sections, some of which may not be read at all by the customers). Bundling may also be referred to as a "package tie-in."(4) Case law in the United States sometimes uses the terms "tying" and "bundling" interchangeably.(5)

    In view of their potential efficiencies, many economists believe that, in general, tying and bundling are more likely to be procompetitive than anticompetitive.(6) Analysis of the anticompetitive effects of tying and bundling by U.S. courts, by contrast, has evolved over time. Although courts long have expressed concern that tying or bundling might enable firms to use monopoly power in one market as leverage to curb competition, and thereby acquire monopoly power, in a second market,(7) judicial concern has eased as tying and bundling have become better understood. Once thought to be worthy of per se condemnation(8) without examination of any actual competitive effects, tying currently is deemed per se illegal under U.S. Supreme Court rulings only if specific conditions are met, including proof that the defendant has market power over the tying product.(9) Further, the Supreme Court has recently recognized that competitive markets and tying arrangements are not incompatible.(10) Indeed, some lower courts have required proof of likely or actual anticompetitive effects and efficiencies in tying cases.(11)

    At the Hearings, one panel discussed how the Agencies and the courts could best analyze tying and bundling when two or more products are tied or bundled together and at least one of the products is protected by intellectual property rights. Panelists discussed how to reach the right answers in particular cases and how to give private parties a reasonable ability to predict how their intellectual property licensing practices will be treated under the antitrust laws.(12) As discussed below, panelists generally doubted that tying and bundling involving intellectual property are likely enough to harm consumer welfare to justify per se treatment, and therefore advocated a rule of reason approach that would require proof of likely or actual anticompetitive effects and allow consideration of the efficiencies that such arrangements may generate.(13)

    II. LEGAL ANALYSES OF TYING AND BUNDLING(14)

    Ever since the late 1940s, when the Supreme Court stated in International Salt Co. v. United States that "it is unreasonable, per se, to foreclose competitors from any substantial market,"(15) and in Standard Oil Co. v. United States that "[t]ying agreements serve hardly any purpose beyond the suppression of competition,"(16) U.S. courts have found tying to be per se unlawful.(17) Although the Court's 1984 Jefferson Parish opinion confirmed the continued role of a per se analysis,(18) it emphasized that market power in the tying product was a requirement for per se illegality.(19) Later that same year, the Court explained that the application of the per se rule to tying had evolved to incorporate a market analysis:

    [T]here is often no bright line separating per se from Rule of Reason analysis. Per se rules may require considerable inquiry into market conditions before the evidence justifies a presumption of anticompetitive conduct. For example, while the Court has spoken of a "per se" rule against tying arrangements, it has also recognized that tying may have procompetitive justifications that make it inappropriate to condemn without considerable market analysis.(20)

    Consistent with this approach, the Supreme Court recently acknowledged that "[m]any tying arrangements . . . are fully consistent with a free, competitive market."(21) Indeed, leading treatises have commented that the test lower courts use to determine whether to apply the per se rule to a particular alleged tie "increasingly resembles a rule of reason inquiry."(22) Although the elements of a per se tying violation have been articulated differently, courts generally require that:

    स्रोत : www.justice.gov

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