Page images

2. The Supreme Court of the United States has jurisdiction to review and correct upon a writ of error a ruling by a state court that a judgment rendered in the same state or in a foreign country without jurisdiction binds and estops the appellant.

3. Assuming that a valid judgment binding upon the defendant has been rendered by a court of the state in which the judgment is drawn in question or of a foreign country, the Supreme Court of the United States has no jurisdiction to review the effect given thereto as an estoppel, whether the alleged error be that too great or too little effect as an estoppel has been given.

Edwin H. Abbot, Jr. BOSTON, MASS.


Published monthly, during the Academic Year, by Harvard Law Students.




Editorial Board.
CHARLES E. HUGHES, JR., President, JAMES B. GRANT, JR., Treasurer,














CORRECTION. Attention is called to an error in the February issue in the statement of the decision in the case of Brainerd v. State, 131 N. Y. Supp. 221 (Ct. of Claims). 25 Harv. L. REV. 388. A majority of the court held that costs should not be allowed.

THE PATENTEE'S MONOPOLY AND THE ANTI-TRUST Law. — How far does the Sherman Anti-Trust Act conflict with the monopoly granted to the inventor by the patent law?

The patent statute gives the right to exclude others from making, using, and vending the patented article. But it gives nothing more.? It does not give the right to make, use, and vend, nor the property right in the patented chattel, nor the right to make contracts concerning it. These rights the patentee already has. The patented article itself, then, and contracts in reference to it are subject to the law of the land. Thus it is subject to the police power of the state,' the law of public service, and the criminal law.6

1 U. S. Comp. Stat., 1901, $ 4884, grants to the patentee“for the term of seventeen years the exclusive right to make, use, and vend the invention or discovery."

2 See Bloomer v. McQuewan, 14 How. (U. S.) 539, 549. 3 See Heaton-Peninsular Button-Fastener Co. v. Eureka Specialty Co., 77 Fed.

4 A patented oil must conform to the standard of safety prescribed by the state. Patterson v. Kentucky, 97 U. S. 501. A patentee of medicine must take out a state license to prescribe it as a physician. Jordan v. The Overseers of Dayton, 4 Oh. 294.

5 That the telephone is patented is no excuse for refusing service. Chesapeake & Potomac Tel. Co. v. Baltimore & Ohio Tel. Co., 66 Md. 399, 7 Atl. 809.

6 A state statute may prohibit the use of a patented lottery device. Vannini v. Paine, 1 Har. (Del.) 65.

288, 293

But the criminal law as to monopolies embodied in the Sherman Act was not intended to repeal the patent law.? In his own domain the patentee remains czar. Contracts, therefore, which simply maintain his right to exclude others from making, using, and vending the patented article are valid.The patentee need not license at all,10 and ħe may ordinarily license on what terms he pleases. 11 He may license one to make, another to vend.2 Though the vendor of ordinary chattels cannot fix the resale price so that the purchaser with notice is bound,13 the patentee's right has often been recognized.14 Even by contract, the ordinary vendor cannot determine a resale price if he constructs a system of such contracts with competing dealers. 15 But the patentee may fix the reselling price by a single contract, 16 or by a system of contracts, which stifle competition between dealers.17 That the patentee owns several other patents does not abridge this right.18 In these cases, the patentee merely subdivides his domain.

Has the patentee a right to extend his monopoly to unpatented articles? Conditions in licenses that the licensee purchase certain unpatented supplies only from the patentee have often been upheld."' But even this doctrine has been limited to articles “not of common use, such as can be used only with the patented device.” 20 The Supreme Court has so far declined to pass on the doctrine.21 A state statute expressly prohibiting such form of license seems constitutional.22

7 See Bement v. National Harrow Co., 186 U. S. 70, 92, 22 Sup. Ct. 747, 756. 8 See Victor Talking Machine Co. v. The Fair, 123 Fed. 424, 426. 9 Bement v. National Harrow Co., supra. 10 Continental Paper Bag Co. v. Eastern Paper Bag Co., 210 U. S. 405, 28 Sup. Ct. 748. 11 See Rubber Tire Wheel Co. v. Milwaukee Rubber Works Co., 154 Fed. 358, 362. 12 See Dorsey Revolving Harvester Rake Co. v. Bradley Mfg. Co., 12 Blatchf. (U. S.) 202, 204, Fed. Cas., No. 4,015, p. 947.

13 Bobbs-Merrill Co. v. Straus, 210 U. S. 339, 28 Sup. Ct. 722 (copyrighted books); Dr. Miles Medical Co. v. Park & Sons Co., 220 U. S. 373, 31 Sup. Ct. 376 (proprietary medicine).

14 New Jersey Patent Co. v. Schaefer, 144 Fed. 437; The Fair v. Dover Mfg. Co., 166 Fed. 117; Automatic Pencil Sharpener Co. 9. Goldsmith, 190 Fed. 205. But this right has not been settled by the Supreme Court. See Edison v. Smith Mercantile Co., 188 Fed. 925, 926. In the analogous case, the copyright holder's right has been denied. Bobbs-Merrill Co. v. Straus, supra. In view of the prejudice of the common law against restraints on the alienation of chattels, the question may still be deemed open. See Dr. Miles Medical Co. v. Park & Sons Co., 220 U. S. 373, 404, 31 Sup. Ct. 376, 383.

15 Dr. Miles Medical Co. v. Park & Sons Co., supra. This case set at rest the idea which had been cropping up in the lower federal courts that medicines manufactured under secret process were entitled to special favor. See Dr. Miles Medical Co. v. Platt, 142 Fed. 606.

16 Bement v. National Harrow Co., supra. The ordinary vendor may fix the reselling price in a single transaction. Garst v. Harris, 177 Mass. 72, 58 N. E. 174.

17 Rubber Tire Wheel Co. o. Milwaukee Rubber Works Co., supra; Goshen Rubber Works Co. v. Single Tube Automobile & Bicycle Tire Co., 166 Fed. 431.

18 Indiana Mfg. Co. v. Case Threshing Machine Co., 154 Fed. 365.

19 Heaton-Peninsular Button-Fastener Co. v. Eureka Specialty Co., supra; Dick Co. v. Henry, 149 Fed. 424; Crown Cork & Seal Co. v. Brooklyn Bottle Stopper Co., 172

20 Cortelyou v. Johnson & Co., 145 Fed. 933.

21 See Cortelyou v. Johnson & Co., 207 U. S. 196, 28 Sup. Ct. 105. The case of articles not of common use is now pending in the Supreme Court on certiorari. Dick Co. v. Henry, supra. See Crown Cork & Seal Co.v. Standard Brewery, 174 Fed. 252, 259.

22 Opinion of the Justices, 193 Mass. 605, 81 N. E. 142.

Fed. 225.

But the patentee went further in a recent case. By a system of licenses of a patented tool, useful but not indispensable in the manufacture of bathtubs, the patentee fixed non-competitive prices on the unpatented bathtubs in the hands of manufacturers and dealers. United States v. Standard Sanitary Mfg.Co., 191 Fed. 172 (Circ. Ct., D. Md.). The system was held illegal under the Sherman Act. The patentee's right to monopoly in the patented article was held to protect him no further

. The distinction between this and the last class of cases seems clear. In them reselling prices were not regulated, and as to selling competition had freer play. Moreover, the articles were incidental to the patented device. Judged by the light of reason, such incidental restrictions on incidental articles may well be valid. 23

Again, where the owners of different patents restrict competition between themselves the monopoly is extended beyond that conferred by the patent grant.24 For the imperfect competition between the patented articles is thus destroyed. The right to exclude others from the patented article alone does not sanction the suppressing of competition with a different article, though patented. The scheme is clearly illegal if the restriction of competition between the different patentees extends beyond the life of their patents,25 or includes articles not patented. 26

DISCRIMINATION BY RAILROADS IN ELEVATOR ALLOWANCES TO SHIPPERS. — The utilization of control over the instrumentalities of public service to foster monopolies in other trades constitutes one great vice of most discrimination. It is well established that public service companies must not take advantage of their exceptional position to discriminate in favor of their collateral business undertakings. Wherever they engage in serving themselves, the obvious opportunity for secret discrimination justifies suspicious scrutiny and restriction. The danger inherent in such combinations of conflicting interests has even been held sufficient to render them illegal per se. Thus interstate carriers are forbidden to

23 Possibly the vendor of an ordinary chattel may similarly require the purchase of incidental supplies as part of the price.

24 Blount Mfg. Co. v. Yale & Towne Mfg. Co., 166 Fed. 555; National Harrow Co. 0. Quick, 67 Fed. 130; National Harrow Co. v. Hench, 83 Fed. 36. Contra, United States Consolidated Seeded Raisin Co. o. Griffin & Skelley Co., 126 Fed. 364; Central Shade-Roller Co. v. Cushman, 143 Mass. 353, 9 N. E. 629.

25 Strait v. National Harrow Co., 18 N. Y. Supp. 224.

26 Vulcan Powder Co. v. Hercules Powder Co., 96 Cal. 510, 31 Pac. 581; State v. Creamery Package Mfg. Co., 110 Minn. 415,126 N. W. 126, 623. Cf. Straus o. American Publishers' Association, 177 N. Y. 473, 69 N. E. 1107.

1 See Hays v. Pennsylvania Co., 12 Fed. 309, 313; Scofield o. Railway Co., 43 Oh. St. 571, 609, 3 N. E. 907, 923.

2 Brass v. North Dakota ex rel. Stoeser, 153 U. S. 391, 14 Sup. Ct. 857; Louisville Transfer Co. 0. American District Tel. Co., i Ky. L. J. 144.

3 New York, N. H. & H. R. Co. v. Interstate Commerce Commission, 200 U. S. 361, 26 Sup. Ct. 272; In the Matter of Grain Rates, 7 Interst. C. Rep. 33. See 2 WYMAN, Public SERVICE CORPORATIONS, $ 1359.

4 Central Elevator Co. v. People ex rel. Moloney, 174 Ill. 203, 51 N. E. 254; Hannah v. People ex rel. Attorney General, 198 III. 77, 64 N. E. 776. See 1 WYMAN, PUBLIC SERVICE CORPORATIONS, § 710; 20 Harv. L. Rev. 511, 529-531.

transport commodities in which they have an interest.5 But shippers of goods have always been allowed to profit simultaneously as lessors of the facilities for their transportation, and this is now expressly permitted by the Interstate Commerce Act. But shippers who are unwilling or unable to invest in this independent, incidental business should be entitled to demand service in all ways equivalent to that which others are permitted or invited to provide for themselves. The latter should receive the fair rental value of their property, but no favored position as to the public service itself by reason of their dual character.' Their coöperation cannot relieve the carrier of its primary public duty to furnish facilities for all without discrimination.10

Consequently, when the Interstate Commerce Commission, having permitted " an allowance for transhipment at the Missouri River of grain belonging largely to the elevator owners, found, on rehearing, that they were taking advantage of access to their own grain during elevation to clean, clip, mix, and grade it, from which treatment arose their greatest profit, as dealers, it forbade further compensation for the transfer of grain so treated. The Supreme Court has recently held 13 that in this the commission exceeded its powers, apparently on the ground that Congress had authorized allowances to shippers for every use of facilities, irrespective of preferential advantages involved in the use.14 Interstate Commerce Commission v. Diffenbaugh, 32 Sup. Ct. 22. But if their right to compensation is as agencies in the public service of transportation, the carrier should not permit these elevators in that capacity


34 U. S. STAT. AT LARGE, C. 3591, p. 585, FED. STAT., SUPP., 1909, 257. See United States v. Lehigh Valley R. Co., 220 U. S. 257, 273, 31 Sup. Ct. 387, 391.

6 See Chicago & A. Ry. Có. v. United States, 156 Fed. 558, 561. But see In the Matter of Elevator Allowances, 10 Interst. C. Rep. 309, 326; 12 id. 85, 88.

34 U.S. STAT. AT LARGE, C. 3591, p. 589, FED. STAT., SUPP., 1909, 266. All such allowances must be scheduled and offered to persons and places without discrimination. Wisconsin Ry. Co. v. United States, 169 Fed. 76; Atchison v. Missouri Pacific Ry. Co., 12 Interst. C. Rep. III.

8 State ex rel. v. C. N. 0. & T. P. Ry. Co., 47 Oh. St. 130, 23 N. E. 928; Rice v. Louisville & Nashville R. Co., 1 Interst. C. Rep. 722. See Penn Refining Co. v. Western N. Y., etc. R. Co., 208 U. S. 208, 220, 28 Sup. Ct. 268, 273.

9 Chicago & A. R. Co.v. Interstate Commerce Commission, 173 Fed. 930. The lower federal court in the principal case, infra, did not distinguish advantages attributable only to a favored position in point of service from the legitimate additional return above other shippers for the use of facilities. Peavey v. Union Pacific R. Co., 176 Fed. 409. The slight advantage of information of competing shipments seems unavoidable when leasing is permitted. See Consolidated Forwarding Co. v. Southern Pacific Co., 9 Interst. C. Rep. 182, 206 e; Muskogee Commercial Club v. Missouri, etc. Ry. Co., 12 Interst. C. Rep. 312, 317.

10 Chesapeake & Ohio Ry. Co. v. Standard Lumber Co., 174 Fed. 107. This is held in cases requiring private coal cars to be counted against their owners in distribution of facilities among shippers. Chicago & A. R. Co. v. Interstate Commerce Commission, supra; United States v. Baltimore & Ohio R. Co., 165 Fed. 113. See Interstate Commerce Commission v. Illinois Central R. Co., 215 U. S. 452, 469, 477, 30 Sup. Ct. 155, 161, 163.

11 In the Matter of Elevator Allowances, 10 Interst. C. Rep. 309; 85.

'12 In the Matter of Elevator Allowances, 14 Interst. C. Rep. 315; Traffic Bureau, etc. v. Chicago, Burlington & Quincy R. Co., id. 317.

13 Mr. Justice Mckenna dissented with an opinion in which Mr. Justice Hughes concurred.

14 See Union Pacific R. Co.o. L'pdike Grain Co., 32 Sup. Ct. 39, 41.

12 id.

« PreviousContinue »