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16
The Commoner,
VOLUME 13, NUMBER 2J
r-i K T
IP
i
Supreme Court Decision Ends
"Patent Monopoly"
Tho Washington Post of May 27
printod tho following concorning tho
swooping decision of tho United
States supremo court in tho "patent
trust" caoo:
"Tho so-callod 'patent monopoly
which threatened to provont cut rates
by retailors on all patontod articles
on tho market, was destroyed yester
day by docislon of tho supremo court
of tho United States.
"Tho case in which this, sweeping
ruling was mado was that of tho
Bauer Chemical company of Now
York against James O'Donnell, a
local druggist. Mr. O'Donnell bought
at wholesalo a patontod medicine
manufactured by the Bauor company,
and retailed it at 85 cents por bottle.
Bach bottle bore a' labol bearing tho
warning that tho medicine was
licensed to bo sold at not loss than
$1 per bottle, and tho announce
ment that any dealer who violated
this license would bo sued for dam
ages, and restrained by injunction.
"About ono year ago the appel
lants sought to secure an injunction
in tho district supremo court, but
Justice Wright, before whom tho mo
tion was heard, denied the petition.
Tho chemical company immediately
notod an appeal, and tho district
court of appoals, without rendering
any decision, certified the case to tho
United States supremo court.
"Tho latter court held that owners
of patonts are not given the right by
tho patont law to control the price
at which retailers must sell to con
sumers. The decision In words ap
plied only to a nerve tonic for which
a patent had been issued, but it will
' control all patontod articles, hun
dreds of which are being sold uudor
restrictions on tho retailor not to sell
at cut rates.
"Tho court reversed tho policy
adopted by it in the famous "mimeo
graph case," decided a little over a
year ago when only seven justices
wore on tho bench, but allowed that
case to stand as far as it goes. Thus
was accomplished what has been un
successfully soilKht in conirrnRn ovor
since the 'mimeograph case' was de
cided. "In tho 'mimeograph case' Justices
McKonna, Lurton, Holmes, and Van
Dovantor uphold tho right of patont
owners to place restrictions on tho
nature of articles to be used on tho
patented articles sold. Chief Justice
Whito and Justices Hughes and La
mar dissented. Yesterday Justice
Day, who was absent a year ago from
the court, and Justice Pitney, ap
pointed sinco then, joined with the
chief justice and Justices Hughes and
JLamar in overruling tho policy advo
cated by tho four justices who hand
ed down tho court's decision in the
'mimeograph case.'
"Justice Day announced the de
cision of tho majority mombers. Tho
four minority justices contented
themselves with a mere statement
that they dissented. Justice Day
stated that tho manufacturers rolled
chiefly upon the 'mimeograph case.'
An examination of tho opinion of tho
court In that case, he said, showed
that tho restriction was sustained be
cause tho machine was sold at cost
or loss, and that the owner depend
ed upon the profit realized from tho
sale tf unpatented supplies to be
used upon tho machine for reward
for his invention. No such condi
tions existed, ho added, in the
present case.
"In further attempt to distinguish
the two cases, the justice said that
tho restriction in the 'mimeograph
case was in regard to tho use of tho
machine and only a 'qualified title' to
tho patented article passed. In the
present case, ho pointed out, tho re
striction was to 'keep up tho price
tho sale to tho retailer having been
absolute
''Many manufacturers had joined
tho manufacturer of the norvo tonic
in his fight to sustain tho conten
tcntion that his patent gavo him a
right to sell or uso his patented
articlo under any conditions as to
resale price he might see fit to im
poso. All decisions in the lower
courts, with tho exception of ono,
have been in favor of tho manufac
turers. Almost simultaneously with tho
institution of tho suit by tho Bauer
Chemical company, tho Gillette
Safety Razor company brought an
action against Mr. O'Donnell on simi
lar grounds. Justice Wright heard
both cases, and rendered tho same
decision in tho razor case as he had
in tho patont medicine case. As the
legal points to bo decided were the
samo in each case, counsel determ
ined to. go to trial in tho 'supreme
court on the Bauer case. The court,
however, permitted tho Gillette com
pany, tho Victor Talking Machine
company, tho Waltham Watch com
pany, and tho Ingersoll Dollar Watch
company to file briefs, as they had
cases pending in various courts
throughout the country bearing on
tho rights of patentees to restrict
the resale price of their articles.
Tho arguments were made April 7
last, Frank J. Hogan and D. W.
Baker, representing Mr. O'Donnell.
Officials of tho department of jus
tice regard the decision of tremen
dous importance, putting an end to
existing widespread extensions of
patont monopolies, and sharply draw
ing a' lino of demarkation between
the Sherman anti-trust law and the
patent laws.
"Under the cloak of the legal mo
nopoly granted by the patent laws,
many industries, It is contended, con
trol the price of patented articles to
tho ultimate consumer. Tho depart
ment of justice has contended that
once a patentee sells his patented
articlo ho loses all control of it, and
is powerless, especially in. view of
the Sherman anti-trust law, to estab
lish resalo prices.
"Several anti-trust suits now in
the courts are based unon thin man
ciple, and tho department of justice
has been eagerly awaiting a determi
nation of the question before start
ing moro prosecution on the samo
theory. It is said that the right to
establish resale prices is being
claimed by an almost unllmHAri
number of companies, which are now
expected to avoid attack by the gov
ernment. "When the 'mimeoiminh enno' mna
decided by the divided court, with
only seven judges sitting, the then
Attorney General, Mr. Wickersham,
endeavored to have the court grant
another hearing. From point of im
portance the department of justice
officials were inclined to place the
patent cases on a parity with the
state rate cases.
"Justices Wright and Barnard, of
tho district supreme court, were the
first members of the ben eh f
country to render decisions with re
gard to the patentee's control of his
product which accords with the de
cision of the supremo court of yes
terday. With the exception of Judge
Ray, of the federal court of New
York, they were the only judges of
the country who have taken Buch a
view In tho many other decisions
rendered touching on this point the
courts have held with the patentee."
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