William O. Douglas

“ Since patents are privileges restrictive of a free economy, the rights which Congress has attached to them must be strictly construed so as not to derogate from the general law beyond the necessary requirements of the patent statute. United States v. Univis Lens Co., Inc., supra. So far as the Sherman Act is concerned the result must turn not on the skill with which counsel has manipulated the concepts of 'sale' and 'agency' but on the significance of the business practices in terms of restraint of trade. ”

“ By each of the 1933 agreements Masonite designated the other party as an 'agent' and appointed it as a 'del credere factor' to sell Masonite's hardboard products. The 'agent' expressly acknowledged the validity of Masonite's hardboard patents so long as the agreement remained in force. The 'agent' agreed to promote the sale of Masonite hardboards. Masonite agreed to manufacture designated hardboard products in specified sizes and to ship on orders and specifications from the 'agent' to any place within the continental United States or Hawaii. ”

“ The extent to which that inducement in a given case will have or has had the desired effect is difficult, if not impossible, of measurement. The forces which that influence puts to work are subtle and incalculable. ”

“ That would be no more permissible than a contract between a copyright owner and one who has no copyright, or a contract between two copyright owners or patentees, to restrain the competitive distribution of the copyrighted or patented articles in the open market. ”

“ But the latter agreed to mark, without extra cost, all hardboard with the 'agent's' or its customer's name or trade mark if the 'agent' or customers so desired. And Masonite reserved the right to mark all products sold by the 'agent' with Masonite's patent notice. Masonite warranted that the products were to be 'good, workmanlike products of a character and quality equal to that currently manufactured by it and sold to its customers.' Its liability was to be limited to replacing without cost to the 'agent' any 'defective material when the defect is one of manufacture'. ”

“ United States, 306 U.S. 208, 226, 59 S.Ct. 467, 474, 83 L.Ed. 610, 'It was enough that, knowing that concerted action was contemplated and invited, the distributors gave their adherence to the scheme and participated in it.' The circumstances surrounding the making of the 1936 agreements and the joinder in 1937 of the two other companies leave no room for doubt that all had an awareness of the general scope and purpose of the undertaking. ”

“ The appellees are Masonite Corporation, Celotex Corporation, Certain-Teed Products Corporation, Johns-Manville Sales Corporation, Insulite Company, Flintkote Company, National Gypsum Company, Wood Conversion Company, Armstrong Cork Company, and Dant & Russell, Inc. Each is engaged either in manufacturing and selling building materials, or in selling building materials manufactured by others. All maintain selling organizations and to a large extent compete in the same markets. As we shall see, some have competing patents, though others do not. ”

“ We assume in this case that the agreements constituted the appellees as del credere agents of Masonite. But that circumstance does not prevent the arrangement from running afoul of the Sherman Act. The owner of a patent cannot extend his statutory grant by contract or agreement. A patent affords no immunity for a monopoly not fairly or plainly within the grant. ”

“ This kind of marketing device thus actually or potentially throttles or suppresses competing and non-infringing products and tends to place a premium on the abandonment of competition. It is outside our competence to inquire whether the result was or was not beneficent or whether the evil was or was not realized. ”