Number 2-177 Cited 1954 Trade Cases 69,625 8-11-54 U.S. v. U.S. Gypsum Co.

[P 67,813] United States v. United States Gypsum Co., et al. In the United States District Court for the District of Columbia. Civil Action No. 8017. Filed July 6, 1954. Case No. 548 in the Antitrust Division of the Department or Justice. Petitions of the United States, National Gypsum Co., Certain-Teed Products Co., Ebsary Gypsum Co., Inc., and Newark Plaster Co. for Orders, Modification or Directions for the Enforcement, Construction or Carrying Out of the Fi1:al Decree of May 15, 1951. Sherman Antitrust Act Private Enforcement and Procedure-Suit by Co-Defendants in U. S. Antitrust Suit to Restrain Other Defendant from Seeking to Recover for Use of Its Patents-Jurisdic­ tion-Right of Private Parties to Seek Construction or Enforcement of Government Decree - Petitioners, parties to a Government antitrust decree declaring certain patent licensing agreements void, sought an injunction against respondent, another party to the decree, to restrain four separate suits filed by the respondent against the petitioners in other courts for royalties or for the reasonable value of certain of its patents or for damages because of infringement. The contention of the respondent that the court had no juris­ diction to entertain the injunction suit because (1) only the Government could move to construe or enforce the final decree, and (2) the Government could participate in the four patent suits as an intervenor or as amicus curiae was overruled. Although the Attor- ney General represents the public interest in antitrust cases, where a decree accords rights to parties thereto, they can enforce such rights in a manner consonant with the underlying purposes of the decree. By the terms of the final decree jurisdiction was reservedfor any parties to the decree to apply for construction and enforcement of the decree. Fur­ ther, jurisdiction could be taken, because (1) a court of equity can compel obedience to its decree, and where it is, contended that there has been a violation of the decree; the court can determine whether or not such violation has actually been committed; (2) when a status established by a final decree is allegedly endangered by the acts of the respondent, an issue within the jurisdiction of the court is created; (3) jurisdiction to modify the final decree within limits necessary to perfect its effectuation was expressly reserved by the terms of that decree; and (4) to avoid the possible misconstruction of the final decree in a multiplicity of actions, each involving the meaning and application of the decree. See Dept. of Justice Enforcement and Procedure, Vol. 2, ¶ 8233.325 8233.400, 8233.475; Private Enforcement and Procedure, Vol. 2, ¶ 9035.05. Private Enforcement and Procedure-Where Right Sought to Be Enforced Is Integral Part of Scheme in Violation of Antitrust Laws--Patents---Suit for Royalties or for Infringement Damages-Licensing Agreements Void Under Final Judgment-Scope of Provision of Final Judgment.-Petitioners, parties to a Government antitrust decree declaring certain patent licensing agreements null and void, sued to restrain the respond­ ent, another party to the decree, from bringing in other courts four separate suits, each based on alternative claims for royalties or for the reasonable value of the use of certain of its patents or for damages because of infringement. Petitioners contended that the final decree in the Government case, declaring license agreements illegal, null and void, barred the patent suits. Since two counts in each of the four patent suits were based squarely on license agreements set forth in the Government decree and declared null and void by it, further prosecution of these two counts was enjoined as violative of the final decree. Limited actions involving the direct issue of patent infringement were not enjoined, since in this situation, the final decree entered in the Government case would not be affected. See Dept. of Justice Enforcement and Procedure, Vol. 2, ¶ 8233.325; Private Enforce­ ment and Procedure, Vol. 2. ¶ 9041.155, 9041.350. Private Enforcement and Procedure-Where Right Sought to Be Enforced is Integral Part of Scheme in Violation of Antitrust Laws-Licensing AgreementsVoid Under Final Judgment--Modification of Judgment-Infringement, Contract, and Quantum M eruit Suits-Petitioners, parties to a Government antitrust decree declaring certain patent licensing agreements null and void, sued to restrain the respondent, another party to the

Trade Regulation Reports 67,813 Court Decisions NUmber 2-178 U.S. v. U.S. Gypsum Co. 8-11-54 decree from bringing in other courts four separate suits, each based upon alleged patent uses. Petitioners contended that the patent suits ·were barred by the provisions of the final decree in the Government suit, but that if they were not so barred, that the Govern­ ment decree should be modified so as to prohibit them. The purpose and permissible function of an antitrust decree modification order !S to cover something within the broad purposes of the decree but which, for some proper reason, was not included in the existing · decree. The determinative test is whether or not modification is reasonably necessary to effectuate the basic purposes of the decree. The purpose of the decree was to pre­ vent the unlawful use of patent rights to violate the antitrust laws. The final decree did not cover suits for infringement, in contract, or for quantum meruit. Consequently, the final decree was modified to enjoin prosecutions based on patent infringements and on contracts. To allow recovery on the contracts and grant the relief sought would bring about the very recovery prohibited by the decree declaring the agreements null and void. A.s to the count based on quantum meruit covering the use of the patents, this count would be proper and prosecution thereof should not be enjoined unless the respondent would be barred by unpurged misuse of its patents. However, it was determined that patent misuse existed, that it was shown as a matter of law and on the facts, and that it was unpurged. Consequently, the counts for quantum meruit were enjoined also. See Dept. of Justice Enforcement and Procedure, Vol. 2, ¶8233.325; Private Enforce­ ment and Procedure, Vol. 2, ¶9027.30, 9043.05. For the petitioners: Edward Knuff, Special Assistant to the Attorney General, argued orally; Vincent A. Gorman and Lawrence Gochberg; trial attorneys for the United States, appeared; Stanley N. Barnes, Assistant Attorney General, Charles H. Weston and Edward Knuff Special Assistants to the Attorney General, William D. Kilgore and Vincent A. Gorman, trial attorneys for the United States, were on the briefs (all for the United States). Samuel I. Rosenman argued orally; Seymour Krieger, Elmer E. Finck, and Seymour D. Lewis appeared; Samuel I. Rosenman, Elmer F.. Finck, Seymour D. Lewis, Stanley M. Silver-berg, Howard Weinstein, and Seymour Krieger wereon the briefs, with Finck &. Hub.er, and Roseman - Goldmark, Colin & Kaye, of counsel (all for National Gypsum Co.); Norman A. Miller argued orally; Herbert w. Hirsh, C. Roger Nelson, Henry Clausen, and Franklin M.Schultz appeared; Herbert W. Hirsh, Norman A. Miller, and Clausen, Hirsh & Miller were on the briefs with Garson Purcell, and Purcell & Neilsonof counsel (for Certain-Teed Products Corp.). Benjamin P. DeWitt argued orally (for Newark Plaster Co.), and Joseph S. Rippey argued orally (for Ebsary Gypsum Co., Inc.); joint briefs were filed for N ewark Plaster Co. and for Ebsary- Gypsum Co., Inc., upon which were De Witt, Pepper & Howell (attorneys for Newark) and Joseph S. Rippey (attorney for Ebsary)" as were Benjamin P. DeWitt, Sidney Pepper, and Joseph S. Rippey, of counsel. For the respondent Cranston Spray and Bruce Bromley argued orally Robert C. Keck, Hugh Lynch, J r., and John E. MacLeish appeared; Bruce Bromley, Cranston Spray, Robert C. Keck, and Hugh Lynch, Jr., were on the briefs, as were Cravath, Swaine & Moore, and MacLeish, Spray, Price & Underwood, of counsel (for United States Gypsum Co.). For the Celotex Corporation Albert E. Hallett, Before KIMBROUGH STONE, Circuit Judge, and EUGENE WORLEY and WILLIAM P. COLE JR., Judges of the U. S. Court of Customs and Patent Appeals, sitting as District Judges. For other judgments entered in this proceeding in the U. S. District Court, District of Columbia, see 1950-1951 Trade Cases ¶ 62,578, 62,853; 1946-1947 Trade Cases ¶ 57,473. For opinions of the U. S. Supreme Court, see 1950-1951 Trade Cases ¶ 62,632, 62,729; 1948-1949 Trade Cases P 62,226.

[History of Litigation] Gypsum Company, et al., which were en­ STONE, Circuit Judge [In full text except gaged in the mining of gypsum rocks and for omissions indicated by asterisks]: The in the manufacture and sale of gypsum United States brought an antitrust action products. The complaint charged that a (Civil No. 8017) against United States controlling unlawful combination was effectu- Number 2--179 Cited 1954 Trade Cases 69,627 8-11-54 U.S. v. U.S. Gypsum Co.

ated by means of substantially uniform manner whatsoever the provisions of patent license agreements between USG their current license agreements fixing, and the other manufacturing defendants as maintaining, or stabilizing prices of gyp­ licensees. At the close of evidence for the sum board or the terms and conditions United States, the statutory Court of three of sale thereof, and (2) from entering into or performing any agreement or Judges sustained a motion to dismiss the understanding in restraint of trade and complaint under Rule 4l(b) of the Federal commerce in gypsum board among the Rules of Civil Procedure upon the ground several states in the eastern territory of that on the facts and the law the Govern­ the United States by license agreements ment had shown no right to relief ( U. S. to fix, maintain or stabilize prices of v. U. S. Gypsum Co., et al. (1946-1947 TRADE gypsum board or by license or other con- CASES P 57,473], 67 F. Supp, 397). certed action arranging the terms and conditions of sale thereof" The Government appealed and the Su- preme Court reversed and remanded "for On November 27, 1950, the Supreme further proceedings in conformity with this Court decided [1950-1951] TRADE CASES opinion" [1948-1949 TRADE CASES ¶ 62,226] ¶ 62,729] (340 U. S. 76) that the decree (333 U. S. 364, 402). This decision was on of November 7, 1949 was inadequate. The March, 8, 1948 with rehearing denied on Court pointed out wherein it found such April 5, 1948 (333 U. S. 869); inadequacies and closed its opinion as fol- After remand, the Government moved for lows: "With these general suggestions the a summary judgment, which was entered details and form of the injunction can be more satisfactorily determined by the Dis­ on November 7, 1949 (one Judge dissent- ing) [1950-1951] TRADE CASES ¶ [62,578]. As trict Court. Its procedure for the settle­ of that date, this Court entered a decree ment of a decree is more flexible than -ours.". the same day, the Supreme intended to cover the matters involved. On Both sides appealed. The Government con­ Court extended its injunction order of May tended that the decree was not adequate to 29, 1950 (339 U. S. 960) to be "continued cure the ill effects of the illegal conduct of in effect until the entry of a final decree the defendants. The defendants contended in the District Court." that this summary judgment had denied On May 15, 1951, this Court modified their right to present direct evidence which its earlier decree in accordance with this would have established the lawfullness of opinion of the Supreme Court [1950-1951 their activities. TRADE CASES ¶P 62,853] There was no ap­ peal therefrom This is the present Final May 29, 1950, the Supreme Court dis- Decree. missed the appeal of the defendants [1950- 1951 TRADE CASES ¶ 62,632] (339 u. s. 959) In January, February or March, 1953, in a memorandum (339 U. S. 960) wherein USG filed separate similar actions against it affirmed Article III of the November 7 four of the other corporate defendants in 1949, decree and stating: the antitrust action. These suits were: against the National Gypsum Company, in * * * Article III of the decree of the Northern District of Iowa; against the District Court of N ovember 7 1949 Certain-Teed. Products Corporation, in the reading as follows: The defendant com- panies have acted in concert in restraint same District ; against Newark Plaster of trade and commerce among the sev­ Company in the District of New Jersey; eral states in the eastern territory of the and against the Ebsary Gypsum Company, United States to fix, maintain and control in the Southern District of New York. the prices of gypsum board and have Each of these suits was based on alternative monopolized trade and commerce in the. claims for royalties or for the reasonable gypsumboard industry in violation of sec­ value of the use of certain of its patents or tions 1 and 2 of the Sherman Antitrust for damages because of infringement The Act,' is affirmed: The corporate defend­ ants and Samuel M. Gloyd, doing busi­ time period covered by each of these four ness as Texas Cement Plaster Company, suits was, roughly, from the first opinion are enjoined, pending further order of by the Supreme Court (March 8, 1948), to this Court, from (1) enforcing in any the date of the Final Decree (May 15, This extension order appears in the mandate issued to this Court on the remand from the opinion in 340 U. S. P 67,813 69,628 Court Decisions Number 2-180 U. S. v. U.S. Gypsum Cu. 8-11-54

1951), and, as to Newark and Ebsary, up order to effectuate its "basic" purposes, to the filing of the complaint against each (c) to exercise a "paramount" jurisdiction of them. under express reservations in Article X thereof, and ( d), under broad powers of a [Antitrust Decree Claimed as Bar court of equity, as the most appropriate to Patent Suits] forum to prevent possible misconstruction The Petitioner in each of the four suits of the Decree, in a multiplicity of actions, here has filed, in the antitrust case, its by Courts unfamiliar with this antitrust separate petition to enjoin the USG suit case litigation. against it and for associated relief. Very Besides countering each of these grounds, broadly stated, these petitions are based on USG contends (a) that only the Govern- claimed protection of the Final Decree in . ment (being the sole original complainant) the antitrust case, on misuse of patents, can move to construe or enforce the De­ and on prevention of a multiplicity of ac­ cree, and (b) that the Government can tions. Stay orders have been entered in participate in the four suits as a permitted the two Iowa District cases to await action intervener or as an amicus curii. here. Also, the United States has filed a Such being the contentions as to this petition to enjoin USG from asserting any issue, it seems logical to consider first the claim or suit "in whole or in part on any contentions of USG. The main reliance of of the license agreements adjudged illegal, USG- is Buckeye Coal and Railway Co. v. null and void by the final decree of this Hocking Valley Co., 269 U. S. 42. Peti­ Court entered on May 15, 1951, or on any tioners distinguish this case on the grounds provision thereof." As to any claims based that the Buckeye was not a party to that on such license agreements, the United antitrust suit (while Petitioners are de­ States alleges that such "are barred by, fendants in such action here); and that and constitute an attempt to defeat, said Article X of this decree expressly reserves decree." As to any "alternative claims" set jurisdiction to enable "any of the parties forth in such four suits the United States to this decree * * * to apply to this "takes no position" as to whether or not Court, at any time for such orders" etc. they are barred by the Final Decree. They cite Missouri-Kansas Pipe Line Co. v. Both by briefs and oral arguments, the U.S. [1940-1943 TRADE CASES ff 56,103], 312 issues have been excellently presented by U. S. 502; Local Loan Co, v. Hunt, 292 U. S. very able counsel for all of the parties. 234 and Terminal Railroad Assn. v. U. S., 266 U. S. 17 to support their contention A plan as a guide to our sequence in that parties to an antitrust case may act considering the issues before us is under to protect their interest based on the anti- four general headings as follows: trust Decree. I-Jurisdiction [General Enforcement Powers of Equity] II-Scope of Article IV of the Decree Speaking generally and without regard III - Modification of the Decree to any special considerations applicable to IV-Misuse 22nd Purge antitrust suits it is correct to say that a This opinion will follow that arrangement. court of equity has power to enforce its decrees and that such power includes im- I-Jurisdiction plementation of the basic purposes thereof in so far as such appears from the lan­ Jurisdiction of a Court to act upon guage or from the, clear intendment thereof. matters presented to it is purely a matter These rules apply to civil antitrust suits of power to act. Having such power, the impor­ whether a Court should exercise it may or brought by Government with the tant qualification or limitation as to the may not become a matter of discretion parties who may take advantage of them. depending upon whether under all the cir­ This difference arises from the purposes of cumstances of the situation before the such suits The purposes of such an action Court," the Court has a duty or has a choice. are to destroy an economic situation which Petitioners claim jurisdiction here on four is resulting from a conspiracy or monopoly grounds: (a) to compel obedience to the in restraint of interstate commerce to the Decree, (b) to implement the Decree in harm of the public.

P 67,813 Copyright 1954, Commerce Clearing House, Inc. Number 2-181 Cited 1954 Trade Cases 69,629 8-11-54 U. S. v. U.S. Gypsum Co.

To represent and protect this public side lines" against the "east side lines" interest is made the duty of the Attorney based upon the contention that the latter General (15 U. S. C. A. § 4 and related had violated an antitrust case decree to the sections of the Act).2 damage of rights alleged accorded the "west USG relics upon the Buckeye Coal & Rail­ side lines" under that decree. In that opin­ way Co. et al. v. Hocking Valley Railway ion (p. 27) the Court stated: Company et al., 269 U. S. 42, which dis­ "In these proceedings, the United States missed certain petitions· in intervention seek­ did not join in the complaint or participate ing relief in an antitrust suit brought by in the hearing in the District Court, but the Government and in which a decree for has since appeared and is aligned with dissolution had been entered some seven the appellees. The Proceedings were in- years before the intervening petitions were stituted by the west side lines, not to filed, as establishing the doctrine that only indicate the authority of the court, but to enforce rights claimed by them under the Attorney General can seek to enforce, the original decree. The controversy is construe or modify a decree requiring dis­ between them and the east side lines as solution under the Act . There are expres- to whether the former or the later shall sions in the Buckeye case which tend to hear transfer charges on west bound support such a view However, this state- through freight." ment is immediately followed by another Also, the Court (p. 29) stated: which clearly implies that the situation might have been different had interveners The question whether the east been parties to the antitrust suit. side lines are bound to pay transfer charges on west bound through freight Parties to an original antitrust suit have depends upon the proper construction a status therein which often does not apply and application of the original decree." to outsiders This arises from the practical effects of the decree upon the legal rights [Intervention in Columbia Gas of the parties. Such a decree is based upon Case Cited] a determination that the Act has been There is another case which is impor- violated by an existing economic situation. tant. In an antitrust suit by the United Necessarily, the relief is such alteration of States v. Columbia Gas and Electric Ca. et al., that situation as will do away with all a consent decree was entered. The closing unlawful features and potentialities. Un- paragraph of the decree provided that Pan­ avoidably, such legal surgical operations handle Eastern Pipe Line Co. (not a party involve and change the inter relationship of in the action) "upon proper application, the defendants, whose only reason for being may become a party hereto for the limited made parties defendant was that they parti- purpose of enforcing the rights conferred cipated in the violation of the Act. Such by Section IV hereof." Thereafter, Pan- decrees are intensely practical. Often in handle sought to do this by applying for this readjusting process, a decree provides leave to intervene which was denied by not only for duties but also for rights inter the District Court. The appeal of Pan- se the parties. Where such rights are given, handle is Missouri-Kansas Pipe Line Co. v. they carry to the recipient party the right United States et al. [1940-1943 TRADE CASES to urge compliance, within the limits of ¶ 56,103], 312 U.S. 503. the decree. In discussing the case, the Supreme Court This is the rule applied in Terminal Rail­ stated (p. 504) that the ''issues here revolve road Association of St. Louis et al. v. United around the scope of those provisions of the States et al., 266 U. S. 17. This was an decree." Among the arguments pressed action for contempt instituted by the "west was a challenge to the jurisdiction over

2 This duty is different and broader than the They have therefore no locus standi. United right given individuals to recover separate dam­ States v. Northern Securities Co., 128 Fed. 868" ages under 15 U. S. C. A. § 15. Compare United (should be 808). States v. The Borden Company et al., [1954 At page 49 appears: TRADE CASES ¶ 67,754]. 348 U. S. May 17, "Underneath all these reasons for dismissing 1954. the appeal, is the fundamental objection that 3 At page 49 of that opinion the Court stated: these coal companies presented no case upon "* * The United States, which must alone their petition justifying their intervention. They speak for the public interest. does not appear were not parties to the original suit." with them (the interveners) on this appeal.

Trade Regulation Reports ¶ 67,813 69,630 Court U.S. v. U.S. Co. the appeal or, in the alternative, insisting In the conclnding paragraph, the Court on the propriety of the action of the dis­ states (p. 509): trict court" (p. 505). It was argued that "In a memorandum filed by the Attor­ "the Attorney-General is the guardian of ney General we are advised that on Janu­ the public interest in enforcing the anti­ ary 18, 1941, the district court filed an trust laws * * * (and that) injection of opinion approving the plan for modifying new issues ought not to be allowed to the original decree subject to some sug- delay disposition of the main litigation gestions by the Government. This we * * * (p. 505). The Court stated (p. 506): are told 'is believed to satisfy the public interest,' and so the Government desires "All of these arguments misconceive to sustain the action of the court below the basis of the right now asserted. Its without further litigation. We recognize foundation is the ccmsent decree. We are the· duty of expeditious enforcement of not here dealing with a conventional form the antitrust laws. But expedition cannot of intervention, whereby an appeal is be had at the sacrifice of rights which the made to the. court's good sense to allow original decree itself established. We as­ persons having a common interest with sume that the district court will adjust the formal parties to enforce the common the right which belongs to Panhandle interest with their individual emphasis. with full regard to that public interest Plainly enough, the circumstances under which underlay the original suit." which interested outsiders should be allowed to become participants in a litigation is, [Jurisdiction Sutstained] barring very special circumstances a matter for the nisi prius court. But where We think that these three cases announce the enforcement of a public law also the following rules of law applicable to the demands distinct safeguarding of private situation hete: the Attorney General is the interests by giving them a formal status representative of the "public interest" in in the decree, the power to enforce rights antitrust cases brought by the Government; thus sanctioned is not left to the public but that where a dissolution decree by authorities nor put in the keeping of the specific statement or by fair implication district court's discretion. therein accords rights to parties thereto, "That is the present case Panhandle's they have a standing, in the main suit to right to economic inadequence was at enforce such rights in a manner consonant the heart of the controversy. An impor­ with the underlying purposes of the decree' tant aspect of that independence was the extension of its operations to permit sales In this Final Decree, there was (Article X in Detroit. The assurance of this exten­ an expressly reserved jurisdiction "for the tion was deemed so vital that it was purpose of enabling any of the parties v, safeguarded by explicit provisions in the this decree, or any other person, firm or decree corporation that may hereafter become bound thereby in whole or in part to apply to this Further, the Court stated (p. 508): Court at any time for such orders, modifica- "We are not concerned with the sub­ tions, vacations or directions as may be neces- substantiality of this claim. The sole sary or appropriate (1) for the construction or question before us is whether there was carrying out of this decree, and (2) for the standing to make the claim before the enforcement of compliance therewith. district court. We hold there was such Such reservation is sufficient to sustain standing. To enforce the rights conferred jurisdiction. by Section IV was the purpose of the motion." "Nor can the enforcement of For the reasons that the Petitioners here this protection be deemed remotely in con­ are parties to the original antitrust suit flict with the public duties of the Attorney­ presenting claims to rights under the Final General, nor to bring in digressive issues, Decree; and. that Article X of that Decree nor to impeach the existing decree. It is expressly reserves jurisdiction, we hold that a vindication of the decree." jurisdiction to entertain these petitions

8 We have confined our discussion to parties TRADE CASES ¶ 67,213, 342 U. S. 353; United to the original Antitrust suits. However, there States v. Paramount Pictures et al. [19-8-1949 are other cases where persons not parties but TRADE CASES ¶ 62 244], 334 U. S. 131, l6-1S; directly affected by the decree in such cases United States v. Swift & Co. et al., 256 U. S. have been allowed, in connection with such suits, 106; United States v. California Cooperatirn to intervene or to defend to test their rights. Canneries, 279 U. S. 553; Continental Ins. Co. Examples are Hughes v. United States [1952 et al. v. United States et al., 259 U. S. 156.

1954, Commerce-Clearing House. 1954 Trade 69,631 U. U.S. Co.

exists. In so holding, we apply the lan- reserves that power. Whether or to what guage in the Missouri-Kansas Pipe Line Co. extent the Decree should be modified are case, supra at p. 508 that "We are not con­ matters within the proper exercise of that cerned with the substantiality of this claim. power. If this power shonld be exercised, The sole question before us is whether we think we have power (as admonished there was standing to make the claim be­ by the Supreme Court in this case, 340 fore the district court. We hold there was U. S. at pp. 88-89) to make any modifica­ such standing Such "substantiality'' de­ .tions which will, "so far as practicable, pends upon what we will call "The Merits" cure the ill effects of the illegal conduct, of these controversies to be considered * * * At the same time we cannot later in this opinion. enlarge the Decree beyond the limits neces­ Next, Passing to the four grounds alleged sary to perfect its effectuation ( U: S. v. by Petitioner" to sustain jurisdiction, all of Swift & Co., 286 U. A. - 106,114) Also, which are challenged by USG U. S. v. International Harvester Co., -274 U.S. 693, 702, where the Court stated that a supplemental complaint the , Govern- [Petitioner's Allegations Upheld] by ment to broaden the original decree must The inherent power of a court of equity be denied because "This is entirely incon- to compel obedience to its decrees is con- sistent with the purpose of the consent ceded by USG. It contends that its suits decree both as appears from its terms and do not violate the Decree hence this doc- as it was apparently construed by the Dis- trine. is inapplicable here. Where it is seri- trict Court itself (italics added) · Also, see ously contended as here that these suits do Hughes v. U. S. . [1952 TRADE CASES67,213] ¶ violate the Decree, obviously this court has 342 U.S. 353, 356-357 . power-jurisdiction-to determine whether As to jurisdiction based on possible mis- such violation exists; and, if it does exist, construction of the Decree in a multiplicity how it may be cured. of Conrts. It seems to us that this ground As to the existence of power-jurisdic- is really that of a multiplicity of actions. tion we think it is not controlling that The matter of possible misconstruction of petitioners might urge the Decree as a the Decree is rather a reason for making defense in the USG suits That question is jurisdiction where there is a claimed multi- not one or the existence of jurisdiction in plicity of actions eacli involving the mean- this Court but rather one of whether this ing and application of the Decree. We Court, in its discretion, should exercise think there is a proper and clear multiplicity such jurisdiction instead of leaving such of actions, to wit, the four present suits by issues to be determined in the USG suits. USG and the claims against Celotex and As to the ground for jurisdiction based Kaiser. Multiplicity of actions prevention upon "implementation" of the Decree to is a long established basis of equity jurisdic- effectuate its basic purposes, we think the tion. We think such jurisdiction is present reasoning in Local Loan case (supra) at here. Our conception of this character of p. 239 is merely one of the methods of jurisdiction is that its exercise is discre­ seeking relief in the original action. There tionary instead of compulsory. The extent it was by an ancillary bill and here by peti­ of such exercise should depend upon our tions. Here, as there, the jurisdiction "to solution of the issues herein as to the secure or preserve the fruits and advantages merits. of a judgme11t or decree rendered therein" In this part of our op,mon we are not is a basis urged here for our jurisdiction, determining anything as to the merits but Here, Petitioners urge that Article IV of only broadly that Petitioners haYe the right the Decree established a "status" which is to proceed. endangered by the USG suits. We think Our next task is to determine the merits this issue is within the jurisdiction of this of the several issues which Petitioners Court. As to the nature and limits of im­ claim entitle them to relief. In doing this, plementation, see Hughes v. U. S. [1952 we do not leave behind us all questions of TRADE CASES ¶ 67,213 ], 342 U. S. 353, jurisdiction. The broad issues are: (a) the 356-357. Scope of Article IV of the Decree, (b) the As to modification of the Decree as a Modification of the Decree, and (c) Misuse Jurisdictional matter Article X, expressly of Patents with the related matter of

Trade Regulation Reports 69,632 Court Decisions Number U.S. S. Co.

Purge As to each of these issues there large undertaking for the purposes of this enteres a matter of jurisdiction-not as to opinion. We shall attempt only a sufficient general jurisdiction to entertain Petitioners' outline of the essential highpoints .. actions here but as to the legal limits with­ in which we may act in considering and The Issues determining the particular issue. An illus­ tration of this kind of jurisdiction is the The antitrust suit was to enjoin viola­ general doctrine that a decree cannot be tions of Sections 1, 2 and 3 of the Act. enlarged beyond the effectuation of the These violations were charged as being purposes thereof. carried out by means of patent license agreements granted by USG to the other II-Scope of Article IV defendants (manufacturers of gypsum board). The opinion of Chief Judge Stephens very Petitioners contend: (1) that Article lV finely and completely narrates the facts and of the Decree "in terms and by fair intend­ issues on the trial which resulted in the ment" bars these suits by USG; (2) that, first appeal [ 1948-1949 TRADE CASES ¶ 62,226] even if Article IV "in its present form" (333 U. S. 364). We refer to his opinion is not a bar yet it should be so implemented ( United States v. United States Gypsum C o., as "necessary to achieve the basic purpose" [1946-1947 TRADE CASES ¶ 57,473], 67 F. of the Decree; and (3) that if such remedy Supp. 397) for a more detailed statement is deemed not within the Decree, "as it pres- of the issues. ently stands." the Decree should be so modified, because the need for such relief has only The Final Decree recently become necessary in order to The pattern of the Final Decree of ten achieve its basic purpose. The last of these Articles is as follows., Article I is the juris­ three contentions will be hereinafter treated dictional declaration; Article II is the defi- under the next heading of this opinion nition of terms used in the Decree, these that "III - Modification". of include "Patents" and "Patent Licenses" Article III declares the defendants have [Basis for Determining Scope of Article IV acted in concert to violate Sections 1 and 2 of Final Decree ] of the Act; Article IV is that "Each of the license agreements listed in Article II here­ The scope of Article IV should be deter­ of is adjudged unlawful under the antitrust mined in the light of the issues in the anti­ trust case, of the entire Final Decree, of the laws of the United States and illegal, null proceedings in this Court in connection and void"; Article V contains the injunc- with the two decrees· (November 7, 1949 tion provisions; Article VI covers non- and May 15, 1951), and the here pertinent discriminatory compulsory license agree- statements in the opinions of the Supreme ments from USG to applicants therefor; Court in this litigation. To discuss each of subject to approval of the District Court these matters adequately is an unnecessarily Articles VII and IX are not material to

"Patents" is defined as including all patents the terms or conditions of sale, of gypsum and applications therefor (covering gypsum products sold or offered for sale to other per- board. its processes and methods of manufacture sons, in or affecting interstate commerce; and or use thereof) issued to, applied for or acquired from engaging in, pursuant to such an agree- "within a period of five (5) years from the date ment or understanding, any of the following of this decree." as well as patents issued upon acts or practices: any of said applications, continuations, etc. of "(1) agreeing upon any basis for the selection any such patents or applications. · or classification of purchasers of gypsum prod- "Patent Licenses" mean the patent license ucts; agreements in effect between USG and each of "(2} refraining from selling gypsum products the other defendants "at the time the complaint to any purchaser or any class of purchasers; hereinwas filed and described in said complaint "(3) agreeing upon any plan of selling or as follows: (here follows listing of eighteen quoting gypsum products at prices calculated or such agreements) and any supplement or amend­ determined pursuant to a delivered price plan ment" thereto. which results in identical prices or price quota­ * These provisions are ''from entering into or tions at given points of sales or quotations by performing any agreement or understanding defendants using such plan: among the defendant companies or other manu­ "(4) policing, investigating, checking or in- facturers of gypsum products to fix, maintain quiring into the prices, quantities terms or con­ or stabilize, by patent license agreements or ditions of any offer to sell or sale of gypsum other acts or course of action, the prices, or products."

67,813 Copyright 1954, House, Inc. 2-185 Cited 1954 Cases 69,633 U.S. v. U.S. Co.

us here; Article VIII provides for super- connection with and after that hearing. vision by the Department of Justice to Much of these matters and the hearing bad secure compliance with the Decree; Article X to do (inter alia) with the various sugges­ is the reservation of jurisdiction for the tions as to the form of decree to be entered. purposes of construction of, carrying out of, including the scope and purposes of what or enforcement of the Decree. later became, in substance, Articles III, A condensation of the method or plan ·of IV and VI of that decree. Practically all the Decree to remedy the unlawful situation of the matters were concerned with pre­ may be stated as follows: by annulling the vention of violation in the future, that is, existing named license agreements; by in- after the effective date of the decree to he junction against acts which would tend to entered. However, USG was much con­ defeat the Decree; by use of new com­ cerned with avoiding any provision in the pulsory court supervised license agreements; decree declaring the licenses illegal, null by Department of Justice supervisory in­ and void in their entirety. It was in this spections; and by retention of broad juris­ connection that it voiced its apprehensions diction to protect and effectuate the pur- as to the period involved here. Since our poses of the Decree. concern here is with what took place after the first opinion of the Supreme Court and Proceedings in This Court before entry of the Final Decree. (May 15, 1951), our search was primarily aimed at After rehearing was denied (April 5, anything in this presentation in connection 1948, 333 U. S. 869), this Court held a with the November 7, 1949 decree which conference of counsel which resulted ulti­ might throw particular light upon the period mately in a motion by the Government of our concern. Some little discussion oc­ for summary judgment, it being claimed curred, at the hearing, over the terms and that there was no genuine fact issue re­ conditions of compulsory licenses. maining to be determined. Defendants filed offer- of proof as to fact matters they At this point, it is convenient for us to deemed yet in issue. These two occurrences narrow our consideration of the causes of were in June 1948. Beginning in June 1948 action alleged in the petitions filed by USG and extending to June 14, 1949, numerous in the various other District Courts. These briefs and memoranda were filed by the petitions contain five Counts each in the various parties in connection with the mo- actions against National and against Certain­ tion for summary judgment, the offer of Teed, and six Counts in those against proofs, suggested findings of fact, and form Ebsary and Newark. The first two Counts and contents of decree to he entered. June of all four petitions are directly based on 14, 1949 this Court held an extended hear­ the license agreements set forth in Article II ing upon all of these matters. At the hear­ of the decree of November 7, 1949. Article IV ing, a majority of this Court made clear of that decree nullified completely the li­ their intention to sustain the motion for cense agreements listed in Article II. This summary judgmem; and counsel for all par- nullification did not create a status. It ties were given time to file suggestions and simply declared a status which had existed memoranda as to form of decree and other since the granting of the license patents. pertinent matters. Such suggestions and This Article was made effective pendente lite memoranda were filed up to August 12, by the Supreme Court in connection with 1949. Without further hearing this Court disposition of the appeal of the defendants entered its decree of November 7, 1949. in the antitrust case (May 29, 1950, 339 It is this decree from which the Govern­ U. S. 960) by enjoining any continued ment and the defendants appealed (Defendants' performance thereunder. Article IV passed appeal 339 U. S. 959 and 960, Government ap­ into the Final Decree unchanged. The peal 340. U. S. 76). effect of Article IV was to nullify com­ We have gone through the transcript of pletely these license agreements. In this the hearings in this Court (June 14, 1949), situation, we determine that these two the written or printed suggestions and. Counts in all of these suits should be en­ memoranda of the parties filed before, in joined from further prosecution because In the suit against Ebsary and in that covered in any of the license agreements listed against Newark the additional Count (Count 6) in Article II of the Decree. We will later is for alleged infringement of a patent not herein determine as to these Counts 6.

Regulation Reports 67,813 Court Decisions Number U.S. U.S. Co.

they clearly violate the express prov1s1ons plurality of licenses, accompanied by the of Article IV. We are not impressed by other features that existed m this case the contention of USG that these two made those agreements illegal and that Counts are necessary or useful to meet being illegal, they are unenforceable and are null and void. possible factual situations which might arise in the trials of these suits. Those Counts "Now, we are faced with the dilemma state definitely grounds for claimed relief What are we going to do about it: We and must be so regarded. This determina­ have got to have some new ones if we are going to be fair to the industry, to these tion allows us hereinafter to limit and licensees, the public, and to all concerned· concentrate attention upon the other Counts and so, some provision must be made of each petition. and we think V and VI take care of We turn now to matters in connection that, _and if we declare them null and with the formation of the 1949 decree which void for these reasons, which have been recited in the previous paragraph of this throw light upon the period now involved. decree, that we have taken care of the In this connection, it should be in mind situation. then the four Petitioners here had ceased "In order that United States Gypsum paying royalties (under the license agree- will have no misunderstanding of my ments) shortly after the first opinion of position I want them to know that my the Supreme Court (333 U. S. 364, March suggestion is in no sense based on any 8, 1948). hope or desire on my part to get out of During the discussion at the hearing on any license fees during any interim period, June 14, 1949, Mr. Miller, counsel for Certain­ and if we can agree upon an appropriate license agreement, as far as my client is Teed stated: concerned, we are willing to let the royalty * * * Mr. Dallstream, who will fol­ rate whateverit is, agreed upon apply low me will present to Your Honors the back to the time when we ceased paying exact changes we desire to make in both royalties. I just want to make it clear decrees presented by the Government to all that we a1·e not attempting by this and by USG which would give us the declaration of illegality of them to find decree we would be satisfied with and some way of avoiding the license fees which we hope that Your Honors will which during this none of us have paid." adopt." (Transcript, pp. 8220-8221). Thereafter, Mr. Dallstream stated: In a Reply Memorandum filed by USG (July 23, 1949), are the following statements: "At IV, which United States Gypsum has left out altogether and has gone "The defendant licensees can have no back over to page 7 and shown it lined purpose in making the suggestion that up with VII of the Government, we each patent license be adjudged illegal would like to suggest that in lieu of except to obtain some advantage with either the Article VII of the Government respect to the use of the patents. They and Article IV of U. S. Gypsum, that a apparently believe it will relieve them new Article IV reading in exactly the from accounting for anything done either language of the Masonite case be entered, before or after the Supreme Court's deci- which would read as follows: sion." (P. 6.) "That each of the license agreements "They have no right of any kind to listed in Article II hereof is adjudged Gypsum's patents, in the future any more unlawful under the anti-trust laws of the than if their licenses had expired without United States· and is illegal, null, and this litigation. With the cancellation of void. their present licenses they should only be placed in statusquo to the extent that any "CHIEF JUDGE STEPHENS: You suggest licensee desires to continue the use of that in place of Article VII of the any of Gypsum's patents under which it Government? is presently licensed." (P. 8) "Mr. Dallstream: Of the Government and Article IV of United States Gypsum. "In the first place, Newark seeks a provision that each of the license agree­ "CHIEF JUDGE STEPHENS: Yes. ments be adjudged unlawful under the "Mr. Dallstream: I agree with Mr. anti-trust laws and illegal, null and void. Finck that we cannot dodge, the fact that which not only goes beyond the scope whatever interpretation should be put on of the determination by this court upon the Supreme Court's decision, the majority the motion for summary judgment but of this court have decided that the mere has for its purpose an attempt to be Copyright 1954, Commerce Clearing House, Inc. Cited 1954 Trade Cases 69,635 S. U.S. Co.

relieved from accounting, as stated before the agreements "illegal, mill and void" in in this memorandum." (P. 9) entirety. "National like Newark is one of those The same reasoning as to Article IV companies which seeks to have the entire would apply to the Final Decree unless the license contract declared illegal appar­ ently believing it will relieve them from situation is affected by the later Supreme accounting with respect to anything done Court decisions herein or by what occurred before or after the decision of the Su­ in this Court on the last remand (in con­ preme Court." (P. 15) nection with the entry of the Final Decree here). We have examined the meager orig­ It is clear from the foregoing quotations that the situation as to our period was inal file (in the Clerk's Office) as to what brought up at the hearing and in the USG took place in this Court after the remand on the 340 U. S. appeals We. find nothing memorandum in .. connection with the dis­ except counter suggested forms of decree cussion as to the scope and possible effect filed by the Government and by USG. of what later became Article IV, which Neither contains anything expressly bear- struckdown the licenses in toto, USG thus ing upon our problems relating to this expressed its apprehension that the licensees period covered Ap- had in mind some purpose of avoiding an by these USG suits. parently, this Court took these submitted accounting for use of its patents during our forms its May period in so far as Certain Teed and Celo- and shaped Final Decree of 15, 1951 in endeavoring to follow the direc­ tex were concerned, any ground for this tions. of the Supreme Court as announced. apprehension was expressly disavowed by in 340 U. S. 76. Mr. Dall stream, National Newark and Ebsary made no mention of thematter No party sought to, have it, specifically and· Supreme Court Opinion separately, included m the decree of No- Concisely summarized, the three opinions vember 7, 1949. of the Supreme Court made the following determinations which need considerations in [Licensing Agreements Declared Totally Void] connection with the point II of this opinion. It is important to emphasize the matter, In 333 U.S. 364, the Court decided (1) that in connection with which, these apprehen- the defendants had acted in concert" sions of USG were expressed The main­ conspired to control prices and to monop- contention between USG (on one side) and olize the gypsum industry (2) that the the Government and the other defendants instrumentalities created and employed to (on the other side) was whether the decree effectuate. these purposes-were license agree - should be confined, as to declaration of ments covering patents owned or controlled illegality, to the price fixing provision in by USG; and (3) that such agreements the license agreements. Strenuously, USG covered control (a) of prices of patented contended for such limitation. This appears gypsum board ( expanded in 340 U. S. 76 not only in its arguments and briefs in to cover gypsum products), (b) control or connection with the June 14, 1949 hearing affection of prices of unpatented gypsum but in its original suggestions as to pros- products, and (c) control over terms and pective Articles III, IV, V and VI. As a conditions of sale and distribution thereof. companion and resultant position, USG In the course of this opinion, the Court urged that, while the existing agreements announced that the motive-good faith in should be cancelled, as of the date of the reliance on the belief that such agreements decree, only the minimum price provision were lawful under United States v. General should be declared illegal. The result of Electric Co., 272 U. S. 476 did not bar such and purpose of these contentions would be patent exploitation as here found. The case to leave the agreements valid therefore was remanded for further proceedings. enforceable until entry of the decree, ex­ When this Court granted a summary cept for the minimum price provision. It judgment on this remand and entered its was in this setting and in relation to these decree, both the Government and the de­ contentions, that USG expressed its appre­ fendants appealed. The Government ob­ hensions above set out. The contest was jected to the decree as being too narrow. whether the agreements were illegal only The defendants contended their proffer of as to minimum price provisions or in toto. proof revealed issues of fact which this The decree of November 7, 1949 declared Court should have determined instead or

Trade Regulation Reports 67,313. 69,636 Court Decisions .:,~--1,i- U.S. v. U.S. Gypsum Co. 8-ll-5-1 granting the summary judgment. The Su­ as paragraph 18 of the licenses to each preme Court affirmed Article III of that of these companies (See transcript in the decree to the effect that sections 1 and 2 of Supreme Court, October Term, 1947, No... the Act had been violated; entered an in­ 13, pp. 4416 and 4488). Also, Article II junction against "enforcing in any manner of this Final' Decree defines "'Patents" as whatsoever" the license agreements (339 meaning "United States Letters Patent and U. S. 960); and dismissed the appeal of the applications (therefor) * * * relating to defendants (p. 959). gypsum board, its processes, methods of On the appeal by the Government, that 1nanuiacture or use, now (May 15, 1951 Court altered and broadened some of the the date of the Decree) owned or con- provisions of our decree and remanded the trolled by" USG. Also, the broadening of case "for further proceedings in conformity Article I I § 3 by the Supreme Court (Sun with this opinion" (340 U. S. 76, 95). In U. S. at p. 90) seems directly to include that opinion there was no direct reference "improvement" patent subject matter. to a situation such as is now presented to us arising from these USG suits; Article [Use of Patents Denied] IV was not changed:. As to the second matter, Seasonal In that opinion the Court stated (pp.. after entry or the Final Decree, National 88-90): * * * and Certain-Teed applied for and received Evaluating all of the foregoing matters licenses thereunder Newark and Ebsary and those now before us, we have some have never applied therefor. In the USG doubt as to whether Article IV is firm petitions against Newarkand against Eb- ground and it seems wiser to resolve those sary, it seeks recovery ( Counts I-II)for doubts against the contention that this license royalties on patents covered by the Article by fair implication, covers our situ- old licenses-that recovery included. ation. We are less disturbed in so resolv­ the period ending with the Final Decree ing this doubt by the consideration that we Each of the succeeding Counts sought re- can reach the same ultimate result over covery "to the date of filing this complaint." ground that we deem firm. We have already disposed of all recovery Newarkand Ebsary up to May 15, 1951 (the Final Decree). Our immediate concern is with the period be- In Footnote 9 hereinbefore, we have tween this entry of the Decree and the referred to an additional Count (VI) in filing of these USG actions, early in 1953, the petitions against those companies. USG Neither Newark nor Ebsary have filed an- This seems an appropriate place to deter- swer in these USG suits We were in- mine that matter and, also, of another formed in this presentation, that such answers feature, in those two petitions. The first would include a denial of use of these pat- matter is whether the patent covered in ents during this later period. Such de- those· Counts is included in list of Patents fenses would obviously pose the direct issue defined in Article II of the Decree. The of infringement vel non since this Decree' second is whether those two companies are We think trial of that issue before the liable for infringement of that, as well as N ew York and New Jersey District Courts other patents set forth in Counts I to V should not be interfered with here. There inclusive. is no room, in this situation , for application As to the first of these two matters. Ap- of the multiplicity of actions rule. plication for this patent was filed by Roos each of these two cases must depend, on August 15, 1929 and later assigned to to this issue, upon its own set of facts. USG, to which the patent was issued on Nor do such limited issues affect the Final June 16, 1936, This patent related to the Decree here in any respect. use of dextrinized starch in- gypsum board core composition and method, of manufac­ III-Modification turing same.USG contends that this patent was not included in any of the license ["Modification" Distinguished From agreements with either of these companies. "Implementation"] This, the companies deny. This patent (No. It seems to us that there is some inter- 2,044,401) was obviously an improvement mixing of the positions (as argued by both patent As such, we think it was included sides) of the legal principles of "Implemen- 67,813 Copyright 1954, Cited 1954 Trade Cases 69,637 U. S. v. U. S. Co. tation" of what is claimed to be required by ·enforce its decrees, although these reser­ the Decree (as it presently is) with the right vations in Article X express the purposes of and duty as to modification of the present the general equity doctrine, namely, to con­ Decree. Although the same practical effect strue, carry out and enforce the Decree might result from either "implementation" However, any and all powers (expressed or modification, yet the legal considerations or implied) to modify an equity decree have which control and limit the use of each other limits than "the length of the Chancel­ differ from those applicable to the other. lor's foot." In this respect, we face the We think this divergence lies in the dif- two contentions of USG: (1) that the situ­ ferent purposes to be served based upon ation arising from the USG suits was a construction of different phases of a decree. matter "not then (when the Decree was As to implementation, the search is for entered) before the (this) Court or intended the specific provisions or for the revealed to be decided by it" and, therefore not broad purposes and intendments of a decree. within the Final Decree; and (2) that, if If such search clearly shows such provi­ it is within the power of this Court to sions or such intendment, implementation modify the Decree so as to enjoin its suits, may possible must be employed. If such "there is no sound, equitable reason why" does not appear, then -resort may be had to it should-be this enlarged. These two USG expressed or -implied powers to modify, The contentions present the successive questions bases and the limits of the power and as of power to modify and of discretion in the to the duty to modify (if power exists) de- use of any existing power. pend upon some considerations which differ . Generally speaking, there is no doubt that from those governing implementation. We a court of equity has power to modify it; think the difference between the two remedies decrees so as to make them fully effective. is exampled in Hughes v. U. S. [1952 TRADE USG argues and cites cases dealing with CASES ¶ 67,213), 342 U. S. 353 at 356-8 The the limitations on such courts in construing purpose and the permissible function of au their decree. We may accept them as an­ order for modification of an antitrust decree nouncing the broad doctrine that a decree is to cover something within the broad pur­ may not be enlarged, beyond its intended poses of the decree but which for some proper ·scope, by the medium of modification. proper reason, was not included in the In examining this matter of power we existing decree. Almost always, such modi- must not lose sight of the character of a fications are concerned with remedies. Usu­ decree in an antitrust case. While the gen­ ally they concern situations which were eral legal rules governing modificatio.n of either overlooked at the time the decree wa.s decrees are not exempt from application in entered or which .have arisen or developed such cases, yet the char.acter of such litiga­ ·after the decree. tion permits sometimes requires a degree of elasticity. This feature comes into exist­ [Power to Modify] ence because of the situation that such a Here, we have no doubt of our power to decree is designed vitally to change an un­ make any proper modifications. Such power lawful, but existing, economic arrangement beii1g expressly reserved in Article X of into such rearrangement as will remove the Decree, we do not have to rely on any the unlawful features. In framing such a general equitable doctrine concerning the decree, the Court is always necessarily act­ powers of a court of equity to protect and ing with the knowledge that the remedies 10 Such rules apply to modifications, USG Shoe Machinery Co. v. United States, 258 U. S. presents them under the headings and citations 451, 460; Vicksburg v, Henson, 231 U. S. 258, following: 268-273. 11 (1)Injunctive provisions in a decree must "(3) Plaln and unambiguous terms of a de­ be precise and specific," citing Sohine Chain cree may not be extended or contracted by con­ Theatres v. United States [1948-1949 TRADE struction," citing Hughes v. United States [1952 CASES IT 62,245], 334 U. S. 110, 126: Hartford­ TRADE CASES ¶ 67,213], 342 U. S. 353, 357; Empire Oo. v. United States, 323 U. S. 346. 410; United States v. International Harvester Co., Swift & Co. v. United States [1944-1945 TRADE 274 U. s. 693, 702-3; Terminal RailroadAssn. of CASES ¶ 57,319], 196 U. S. 375, 396, 401; Federal St. Louis v. United States, 266 U. S. 17. 27, 29; Rules of Civil Procedure, Rule 65(d). Butler v. Denton, 150 F. 2d 689; Union Pacific "(2) A Decree Is limited in its application to R .Go. v. Mason City & Ft. Dodge R. Go., 165 the issues actually presented and intended to . F. 844. 852 (rev. on other grounds 222 U. S. be adjudicated at the time of entry," citing · 2:}7); St. L. K. C. & C. R. Co. v. Wabash R. Co., Oklahoma v. Texas, 272 U. S. 21, 43; United 152 F. 849, 852 (modified 217 U. S. 247). Trade Regulation Reports ¶ 67,813 U.S.

it .then deems sufficient may, from experi­ spiracy to restrain interstate commerce and ence thereafter, prove to be incomplete or to monopolize trade therein in the gypsum defective-either because of lack of fore­ industry; that these results had been ac­ sight at the time the decree is formed or complished through concerted action under because of subsequent happenings or condi­ eighteen similar patent license. agreements tions. In short, such a decree can rarely granted by USG to the other defendants; crystallize the entire matter. There must be and that such license agreements were ille­ a measure of only gelling which is suscepti­ gal, null and void. To cure this situation, ble of modification. Such we think is the that Court affirmed Article III of the No­ teaching of Hughes v. United States [1952 vember 7, 1949 decree of this Court and TRADE CASES ¶ 67,213]. 342 U.S. 353, 357 and enjoined defendants, pending further order of United States v. Swift & Co. et al., 286 of the Court, "from (1) enforcing in any U. S. 106, 114, as well as other cases. manner whatsoever the provisions of their Therefore, the question here, as to power, current license agreements fixing, main­ is whether the modifications urged by Peti­ taining, or stabilizing prices of gypsum tioners would be an improper enlargement board or the terms and conditions of sale or (as contended by Petitioners) are proper thereof, and (2) from entering into or per­ to accomplish the purposes of the Decree. forming any agreement or understanding in The determinative test is whether or not restraint of trade and commerce in gypsum such modification is reasonably necessary board among the several states in the east­ to effectuate the basic purposes of the ern territory of the United States by li­ cense agreements to fix, maintain, or stabi­ Decree. ·. . The situation here is that Article IV of lize prices of gypsum board or by license this Final Decree did not expressly or or other concerted action arranging the impliedly cover the character of suits now terms and conditions of sale thereof" brought by USG for infringement or for (33J U. S. 960). On November 27, 1950, indebhotus assumpit or for quantum meruit. this In junction order was "continued in It neither allowed nor forbade such.. It effe.ct until the entry of a final decree in simply made no reference to them at all. the District Court." 12 Some months after the Decree became final, In discussing the duty of the trial court these suits were begun a:nd later brought to in formulating its decree in an antitrust case our attention for action. where conspiracy in restraint of trade and We have, hereinbefore, determined that monopoly have been determined, the Court they involved violation of the Decree as (in 340 U. S. 76 at pp. 88-90) stated: * * * to the first two Counts of each. We now When the case came back here on this hoid that we have jurisdiction to consider last remand, this Court directed (order of whether the Decree should be modified to January 26, 1951) filing of suggestions, as affect prosecution of the Counts for in­ to form of decree, by plaintiff (Govern­ fringement, for indebitatus Assumpit and for ment) and by the defendants. quantum meruit. The violations of the Act are. declared We think these "basic .pu:rposes" are to in Article III, which is the heart of the be sought by consideration of the purposes Final Decree. The other Articles of the of this antitrust suit, of the opinions of the Decree concern the remedies and methods Supreme Court, the proceedings in this which the Supreme Court and this Coats · Court as to formation of a decree on the then thought sufficient to cure the unlawful two remands, and upon the terms of the_ conspiracy and monopoly. Article X per­ Final Decree." formed the function of expressly reserving This was an antitrust action charging vio­ jurisdiction to take further action if experi- lations, by the defendants therein, of Sec-. ence thereafter should make such neces- tions · 1, 2 and 3 of that Act. The Supreme sary or advisable fully to effectuate these Court, in its three opinions (333 U. S., 339 purposes of destroying the monopoly and U. S., and 340 U. S.), determined violations the conspiracy and denying the fruits of Sections 1 and 2 of the Act through con- thereof.

01 Under the preceding point (II-Scope of 11This extension order is contained in the Article IV) of this opinion, we have examined original mandate of the Supreme Court to this such features of these items applicable to that Court on the remand under its opinion in 340 discussion. We will try to avoid repetition here u. s. except as clarity may require. ¶ 67,813 Copyright 1954, Commerce Clearing House, Inc. Cited 1954 Cases 69,639 U.S. Co.

[Background for Modification] (7) In the proceedings in this Court in The practical situation present in this regard to the formation of the November matter of Modification consists mainly of 7, 1949 decree, issues were presented as the following: to whether the then license agreements should be nullified entirely or in a limited (1) For some years extending into the or qualified degree. It was in this con­ trial of this antitrust case, the gypsum in­ nection, that USG argued for a limited or dustry had been effectively organized so qualified prohibition; and made known its that prices and methods of distribution were apprehension that an entire, nullification controlled through the medium of patent might. affect its expectation of receiving license agreements covering patents and compensation for the use of its patents by applications therefor owned or controlled the licensees during our period. This Court by USG. These agreements were between framed Article IV nullifying the license USG and each of the various other defend- agreements entirely, as being illegal. ants. The agreements included both process and machinery covered by the patents. (8) On the defendants' appeal from that decree, the Supreme Court affirmed Article (2) On the first trial on the merits, June III and entered its injunction order (339 15, 1946 (67 F. Supp. 397), this Court de­ U. S. 960). In this injunction the Court termined that, under its construction of expressly forbade defendants from "en­ United States v. General Electric Co., (272 forcing in any manner whatsoever" the U. S. 476) the separate license agreements existing license agreements and this status were legal (pp. 421-441); and that these was thereafter continued up to the Final agreements were made bona fides with no Decree. ulterior purpose to violate the Act (pp. 458-484). (9) On the Government's appeal, the Su- preme Court announced (340 U. S. at 87) (3) On appeal (333 U. S. 364), the Su­ that "good intentions" in the situation of preme Court reversed and remanded this case was no defense; and that here (march 8, 1948) deciding that the industry­ (p. 88) this Court had the duty of com­ wide license agreements, entered with mu­ pelling action to "cure the ill effects of the tual knowledge of the licensor and of all illegal conduct" such action not being of the different licensees, under which prices "limited to prohibition of the proven means and distribution methods would. be con­ (italics added) by which the evil was ac­ trolled, established an unlawful conspiracy ccomplished but many range broadly through and monopoly; and that * * * regardless practices connected with (italics added) gets of motive, the Sherman Act barred patent actually found to be illegal. * * * The exploitation of the kind that was here at- conspirators should, so far as practicable, tempted" (p. 393). be denied future benefits from their forbid­ (4) The Supreme Court asserted "Of den conduct." The Court stated (340 U. S. course, this appeal must be considered on· at 89) that "in resolving doubts as to the a record that assumes the validity of all desirability of including provisions designed the patents involved" (333 U. S. at 388). to restore future freedom of trade, courts No change was made in that "record" in should give weight to the fact of conviction any subsequent proceedings in this Court. as well as the circumstances under which (5) Almost immediately following this the illegal acts occur." opinion of the Supreme Court, each of these Considering this situation, we think the four defendants stopped paying accrued Final Decree should be modified to include or future royalties or paying otherwise for a denial of recovery upon the infringement use of the patents covered by the license Counts of the USG petitions. Our reasons agreements. No payments of any kind for this determination are as follows. were made until new compulsory licenses The basic thing which made this con­ were granted, under the Final Decree, to spiracy and monopoly possible was the National and Certain-Teed-Ebsary and existence of the patent (owned, controlled Newarkdid not take out new licenses. or applied for) situation. It was the un- (6) The manufacturing plants of the lawful use by defendants of the monopoly licensees had been and were organized for rights, normally inhering in patent grants, use of these patent-covered methods. which violated the superior rights protected

Trade Reports ¶ 67,813 69,640 S. Co. by the antitrust Act. One result of this from its prior opinion what we have just unlawful use was to create an economic above quoted. The Court (p. 572) dis­ situation where the conspirators--other posed of the matter as follows: than USG-had conditioned their business * * * operations upon the continued use of these The here particularly applicable part of patent rights which had been given them this quotation is "In view of the modifica­ by the license agreements. When the Su­ tions required by the opinion of this court, preme Court (333 U. S. 364) determined such licensees must pay reasonable rental these license agreements to be violative of and service charges on a quantum meruit the Act, these licensees were placed in basis ( leaving out of consideration any amount an uncertain and perilous position. They otherwise payable for the privilege of prac­ were operating based on the licenses which ticing the patented inventions involved) in re­ were declared violations of the Act. They spect of the machines used in the interim" elected to disregard the license agreements (italics added). and to continue use of the patented devices We think it a fair deduction from the and methods. sentence just quoted, that the Court had We think a close parallel if not indeed in mind the differences in the bases of re­ a here controlling guide-is to be found covery in quantum meruit and for infringe­ in the two Hartford-Empire cases [1944- ment; and also the differences in measurement 1945 TRADE CASES ¶ 57,319], (323 u. s. 386 of damages or recovery for infringement" and 324 U. S. 570). In 323 U. S., one of and on quantum meruit. The prayer on the two broad issues was whether "the these infringement Courts is for "not less provisions of the decree are right" (p. 393). than a reasonable royalty." The District Court had appointed a receiver of Hartford pendente lite, whose duties in­ Both because of the practical and legal situation here, and, also, the teaching in cluded receipt of royalties from patent li­ censees under existing licenses from Hartford. Hartford-Empire case, we think the Field A provision of the decree was that these Decree. should be. modified · to cover prohi­ royalties should be repaid to the licensees bition from prosecuting the USG suits in when the decree became final It disposing so far as they are based on patent infringe­ ment during the period· covered by those of this provision, the Court ( p. 11 ) directed that the receivership should be wound up; suits. and "The royalties paid to the receiver by [Action on Contracts Enjoined] Hartford's lessees may, unless the District Count III of USG petitions is a common Court finds that Hartford has, since the law action of indebitatus assumpsit based on entry of the receivership decree, violated a pleaded express contract. That. contract· the antitrust laws, or acted contrary to and the relief sought are so stated and the terms of the final decree as modified designed to bring about the identical re­ by this opinion. be paid over to Hartford. covery that would be realized had the In any event Hartford should receive out actions been for recovery upon the royalties of these royalties compensation on a provided in the illegal agreements. This quantum meruit basis, for services rendered is but a lefthanded, indirect method for to lessees." recovering such royalties" "Forms of The second appeal [1944-1945 TRADE action are a 1neans of administering justice CASES ¶ 57,319] (384 U. S. 570) was upon rather than an end in themselves * * * petition of the Government "for clarifica- (l Am. Jur. p. 439). The Decree should tion of reconsideration, of the opinion on be modified to enjoin prosecution of these the prior appeal. The Court (p. 571 ) quoted Courts ( Count III).

12 This infringement Count V in the USG is fruits of his violation more completely than the brought under 35 U. S. C. A. § 67 which au­ court requires him to do. And advantages thorizes up to treble damages recovery. These already in hand may be held by methods more Counts allege willful deliberate and persistent subtle and informed, and more difficult to infringement. prove, than those which. in the first place, win 13 This situation reminds of the expression in a market. When the purpose to restrain trade International Salt Co. v. U. S., 332 U. S. 392, appears from a clear violation of law, it is not 400 where the Court stated·: necessary that all of the untraveled roads to The District Court is not obliged to that end be left open and that only the worn assume, contrary to common experience. that a one be closed.· violator of the antitrust laws will relinquish the

¶ 67,813 Copyright 1954, Commerce Clearing House, Inc .. Cited 1954 Trade Cases 69,641 Co.

[Quantum Meruit Recovery for Patent Use] The Facts Count IV of USG petitions is for quan­ The issues as to facts are: (1) whether tum meruit covering the use of the patents. there was misuse; (2) whether. · ii there · Under the Hartford-Empire opinion (324 was misuse, it is shown as matter of law; U. S. 570, 572), we think this Count is and (3) whether, if misuse existed,. it is proper and prosecution thereof should not shown as matter· of law,. to have been be enjoined unless USG is barred by un­ purged before this period or is yet an purged misuse of its patents. undetermined issue of fact. We think there was misuse by USG, IV-Misuse and Purge as matter of law on the facts here, which · In all that we have heretofore stated in has not been purged. The reasons for these this opinion, we have laid aside considera­ conclusions foiiow. The Supreme Court.. tion of the related issues of misuse of (333 U. S. 364) determined that USG had patents by USG and of purge of misuse. misused its patents to create -rarious un­ These issues are now to he examined We law ful restraints effecting monopolization shall first state the pertinent legal rules of the entire gypsum industry This mis­ and then the factual situation to which the use extended to price regulation to sup­ rules are to be applied. pression or related or similar unpatented products and to regulation of methods and . agencies of distribution. The effective in­ The Law strumentalities used by USG were patent It is an age-old doctrine of Equity Juris­ license agreements containing various re­ prudence that equity will deny use of its strictive provisions. powers to a wrongdoer This is the doc­ One such provision ( covering prices) trine of "unclean hands" . This rule is had not been used for some years (since applicable where the owner of patent rights 1941) but the right to use had not been seeks to extend those rights beyond the abandoned but expressly retained. limits of his patent monopoly. This is the In connection with formation of the first doctrine of "misuse" of patents. This does decree (November 7, 1949,) USG opposed not nullify the patent but prevents en­ strenuously a suggested provision declaring forcement of it. Because of the nature of the license agreements "illegal, null and patent grarits and because of the nature of void". It contended the provision should this equity doctrine, such owner may, as to go no further than to declare the "mini future protection of his rights and after mum .price provisions" of the licenses to be the baleful effects of the misuse have been illegal" and that the license be "hereby fully dissipated, relieve himself of this cancelled and terminated" suggesting that impediment by ceasing the unlawful use. the broader provision had the purpose to This is the doctrine of "purge". These relieve the licensees "from accounting with rules apply to whatever the form of the respect to anything done before or after suit by the patent owner may be (Edward the decision of the Supreme Court" (italics Katzinger Co. v. Chicago Metallic Mfg. Co. added). [1946-1947] TRADE CASES ¶ 37,524 ] 329 u. s. On the appeal of the defendants (339 394, 399-400). 15 U. S. 960), that Court enjoined defendants Some of the cases applying or Illustrating Continent Invest. Co. [1944-1945 TRADE CASES the limits of the matters in this paragraph are ¶ 57,201], 330 U. S. 661, 665-672; Sola Electric United States v. National Lead Co. [1946-1947 Co. v. Jefferson Electric Co. [1940 - 1943 TRADE TRADE CASES ¶ 57.575]. 332 U. S. 319. 335; CASES ¶ 56,245]. 317 U. S . 173, 175; Morton Salt Bruce's Juices v. American Can Co. [1946-1947 Go. v. G. S. Suppiger Co. [1940-1943 TRADE TRADE CASES ¶ 57,553]. 330 U. S. 743, 755; CASES ¶ 56,176], 314 U. S. 488, 491-494; B. B. Edward Katzinger Co. v. Chicago Metallic Mfg. Chemical Co. v. Ellis et al. [1940-1943 TRADE Co. [1946-1947 TRADE CASES ¶ 57,524], 329 CASES ¶ 56,177], 314 U. S. 495; Leitch Mfg. Ca. U, S. 394, 399-402; Transparent-Wrap Machine v. Barber Co., 302 U. S. 458, 461-463; Altoona Co. v. Stokes & Smith Go. [1946-1947 TRADE Publix Theatres v. American Tri-Ergon Cor­ CASES ¶ 57,532]. 329 TJ. S. 637. 645; Hartford poration, 294 U. S. 477, 493; Carbice Carp. of Empire Go. v. United States [1944-1945 TRADE America v. American Patents Development Cor­ CASES ¶ 57,319]. 324 U. S. 570, 571-572; Same v. poration, 283 U. S. 27, 31-35; Continental Wall Same [1944-1945 TRADE CASES ¶ 57,319], 323 Paper Co. v. Louis Voight& Sons Co., 212 U.S. U. S. 386, 414.--419·: Mercoid Cororation v. Mfg. 227, 256 et seq.

Trade Regulation Reports Court U.S.

"from enforcing in any manner whatsoever and not the only or exclusive facts showing the provisions of their current license agree­ purge." In spite of this cautionary reserva­ ments * * This order was made May tion, we must conclude that USG is pre­ 29, 1950 and continued in force until the senting here those matters which it regards Final Decree (May 15, 1951). as most potent in showing purge. In each of the present USG suits, Counts The. first of these five is that USG did I and II are expressly based on the old not fix prices, under its licenses, after license agreements and seek to recover the July 8, 1941. This is true. However, its royalties provided therein in the amounts effect is dissipated by two considerations: provided for and measured by those agree­ first, the notices that minimum prices bul­ ments. Counts III and IV are, respectively, letins ·would be suspended included the actions of Indebitatus assumpit and quantum statement that such suspension would con­ meruit posed on the same underlying factual tinue "until we decide again to exercise situation created by the license agreements. our right to do so"; 10 and, second, this The amounts sought in each of those two price fixing provision is inseparably joined Counts is precisely the same as stated in with other provisions found violative of Counts I and II-in Count III, the amount the Act (Edward Katzinger Ca. v. Chicago is measured as in the agreements. Count Metallic Mfg. Co. [1946-1947 TRADE CASES V (also Count VI in Newark and Ebsary ¶ 57,524], 329 U.S. 394; MacGregor v. West­ snits) is for infringement based on deliber­ inghouse Elec. & Mfg. Co. (1946-1947 TRADE ate infringement and praying recovery for CASES ¶ 57,525], 329 U. s. 402). an amount ("not less than a reasonable. The second claimed purging act is based royalty") which exactly equals the amount on the claimed acquiescence of USG to the measured by the unlawful agreements. repudiation of the illegal agreements by We think this course of conduct, as clearly Petitioners following the first appeal (333 shown by the proceedings of record in U. S.). The record herein does not support the antitrust case and in these suits by the claim that USG "acquiesced" in these USG, must be construed as meaning that cessations of payments by Petitioners. The USG has continued to misuse its patents position of USG at that time is more ac- by seeking recovery, directly and indirectly, curately described, by one of its counsel at on the illegal license agreements up to this the argument before us. 17 Thereafter noth­ time. We think we should exercise our ing appears bearing on ''acquiescence" until discretion and entertain these petitions on the hearings (June 14, 1949) and the memo­ the ground of preventing a multiplicity randa in connection therewith in respect of actions which affect the complete effec­ to the summary judgment and resultant tiveness of the. Final Decree; and that form of decree to be entered thereon, In USG should be enjoined from further prose- that connection, USG not only did not cution of these actions. claim that the licenses had been rescinded but it urged strongly that only the mini- [Alleged Purging Acts] mum price fixing provisions were illegal USG urges that "this Court on the record and that, in all other respects, the license before it knows of a number of facts any agreement should be "cancelled" only as one of which constitutes evidence of purge of the date of the decree to be entered. At at a time prior to May 15, 1951." USG that time and thereafter, it made clear then discusses five of such facts, with the that it expected to have and waived no reservation that they are "only illustrative rights to have "compensation" for the use

11. The "potential power" (Ethyl Gasoline under the license, because the Supreme Court Corp. v. United States, 309 U. S. 436 458) had held them unlawful. remained. "USG likewise did nothing to try to en­ 11 Counsel stated that the first decision of the force the license agreements. We just sort of Supreme Court (333 U. S.) "came as quite a were in a status quo during that period there shack to the old industry. We were not ex­ as far as taking any action. No action was pecting that. And everybody stopped in their taken by us to enforce them And that is why, tracks as far as these license agreements were in answer to your question, I wanted to post­ pone it to explain that situation. And that concerned was that no effort was made to audit the books ''The licensees stopped paying royalties. They no royalties were paid during this three-year stopped making reports. As National in its period that is involved in this litigation out in petition sets out, they stopped doing anything Iowa, and New Jersey, and New York."

67,813 Copyright 1954, Commerce House, Inc. 69,643

of its patents; however, there was no sug­ CASES ¶ 57,319] (323 U. S. 386, 411and 324 gestion as to what form enforcement of U. S. 570, 572). In none of these citations those rights would take if not voluntarily was there found any attempt to extend paid. Not until these USG suits were filed unduly a patent monopoly beyond the was that made clear. Such suits included entry of the final decree in the antitrust Counts for recovery under the unlawful litigations there involved. In each of these agreements Throughout; there is no basis cases, the doctrine of patent misuse and for this claimed "acquiescence". purge was recognized but was found not The.. third claimed purging act is the effective in the situation then before those after by USG, early in the spring of 1949 Courts. The USG suits now pending show (February or March), of new forms of conclusively that even yet it is striving to licenses These proffered forms of licenses enforce the royalty provisions of the illegal are not effective as acts of purge, as to patent license agreements. our period, for two reasons. First,. they We think such an attempt is clear misuse were not intended to become effective of its patents; that such misuse yet con- and the entry of the decree because it was tinues and that to allow prosecution of not until .that time that the unlawful license these suits would weaken the effectiveness agreements were to be "cancelled" and termi- of the Final Decree As to Quantum meruit nated" (Article IV, 2 of the form of decree Counts ofthe USG petitions, we think it submitted by USG on March 4, 1949). will be sufficient if we enjoin further prose- Second, they differed in several respects cution on the basis of preventing recovery from the form approved by the Supreme in a multiplicity of suits wherein the mis­ Court (340 U. S. 76). That Court (p. 90) use of the patents which were involved found the definition of gypsum board too in this antitrust suit is shown, as matter restrictive; and also the time limit for of law, to exist and not have been purged. applying for new licenses (pp. 934). Conclusion The fourth claimed act of purge is that USG had decided not to appeal from the Our ultimate conclusions upon the issues decree of November 7, 1949, "unless the here are as follow: (1) that we have juris­ Government appealed in which event it diction to entertain and determine the issues felt it would be required to appeal, in self presented by Petitioners; (2) that the Final defense:". Why either this unacted upon Decree should· be modified as indicated in decision not to appeal or why an appeal point "III-Modification" of this opinion; by the Government should in any way (3) that further prosecution of all Counts affect this matter of purge is not clear to of the USG suits should be enjoined. us. The two appeals (USG and the Gov- Petitioners are granted thirty days from ernment) involved entirely different legal the filing of this opinion, to serve upon issues and situations. USG appealed from opposing counsel and to file with this the entry of any decree "on the ground Court, suggested form of decree and form of their right to introduce material evi­ of Conclusions and Findings dence" (340 U. S. at p. 82); the Government appealed solely "in an effort to have the [Dissenting Opinion] provisions of the District Court decree en­ COLE, Judge; In reaching a different con- larged" (340 U. S. at p. 82). clusion from that presented in the majority The fifth purging act (or situation) is opinion, I find it advisable to present this that the Supreme Court (339 U. S. 960) statement of my reasons therefor, which enjoined USG, on May 29, 1950, from "en­ statement becomes brief because of the ex­ forcing in any manner whatsoever" the price cellent rehearsal by my colleagues of the provisions of the license agreements.18 USG background and present status of this litiga­ relies upon Standard Oil Co. v. Clark [1946- tion. 1947 TRADE CASES ¶ 67,615], 2 Cir., 163 F. As so aptly stated by the United States. 2d 917, 927, cer. den. 333 U. S. 873 and the in its brief, "of course, when a count's two Hartford-Empire cases [1944-1945 TRADE jurisdiction is drawn in question this is the

15 While not material in connection with this ''by license or other concerted action arranging contention of purge, it is true that this injunc- the terms and conditions of sale thereof (gyp- tion went beyond price fixing and extended to sum board)." 69,644 Court Decisions ·U.S. U.S. Co.

threshold question in the case." This liti­ tered under which consent decree a stockholder gation was initiated, as the title indicates of the defendant corporation had the right by the United States as the sole plaintiff to become a party which right he sought and was against the defendants now appear­ to exercise. The Attorney General approved ing as defendant petitioners herein except the plan presented by the petitioner for USG which appears as defendant respond­ modification of the original decree. It is ent thereto; also, initially, it had as its significant that the court in dealing with basis the protection of the public interest this phase of the litigation said: in enforcing provisions of the antitrust laws. * * * This, we are told, "is believed The final judgment, entered therein after to satisfy the public interest," and so the many years of intensive litigation, found Government desires to sustain the action against all defendants in language clear, of the court below without further litiga- concise, and completely capable of inter­ tion. We recognize the duty of expedi­ pretation to meet any applicable situation tious enforcement of the antitrust laws. growing out of the relationship which was But expedition cannot be had at the sacrifice of rights which the original de­ the subject matter thereof. Inter alia, it cree itself established. We assume that adjudged unlawful under the antitrust laws the district court will adjust the right of the United States, and illegal, null and which belongs to Panhandle with full void each of the license agreements listed regard to that public interest which in the decree. underlay the original suit. It is my view that the United States can Following a rehearsal of the chronologi­ the sole spokesman for the public cal course this lengthy controversy pur­ interest. Buckeye Coal & Railway Company sued, the United States, in its brief, made et. al. v. Hocking Valley Railway Company this statement: et al., 269 U. S. 42. While there have been It is, of course, probable that the courts situations, such as in the case of Missouri- in which suits have been brought will Kansas Pipe Line Co. v. United States et al. give effect to this Court's judgment and [1940-1943 TRADE CASES ¶ 56,103], 312 U. S. dismiss, because of the judgment all 502, which might be construed, to some claims based on the voided license agree­ ments. * * * extent as tending to contradict the rule * * laid down in the Buckeye case, supra I do * * * The position of the United States, not so regard it. as set forth in its petition, is that said Article X of the decree in this suit is final judgment bars enforcement of any quite broad in providing that the parties claim based in whole or in part upon any license agreement tints adjudged may apply to this Court "at any time for null and void, and that suit to recover such orders, modifications, vacations or upon any such claim constitutes an at- directions as may be necessary or appro­ tempt to defeat the Court's final judg­ priate ( 1) for the construction or carrying ment The petition prays, by way of out of this decree, and (2) for the enforce­ relief, that this Court enjoin USG from ment of compliance therewith," but this asserting any claim, and from maintain­ does not, in my opinion, contain the right ing, instituting or threatening to institute for the defendants to stand in the shoes any action based in whole or in part of any license agreement which the Court of, or even with, the United States as a had adjudged illegal, null and void. protector of the public interest in litigation The United States stated in its petition of this character and in so doing, settle that it takes no position as to whether their own private differences. Likewise, USG's alternative claims for recovery on such litigation, initiated by the United-States, a quantum meruit basis or for infringe- will not permit the main action to be ment, as made in the four foregoing actions, encumbered with extraneous issues of a are barred by this Court's final decree of May 15, 1951, or as to whether this private nature. United States v. Columbia Court should enter an order enjoining Gas & Electric Corporation et al., 27 F. Supp. USG from prosecuting such alternative 116. claims. (Italics supplied.) The opposite viewpoint looks for support Just why this court, under the circum­ to Missouri-Kansas Pipe Line Co. v. United stances, should feel called upon, in view States, supra, which was an antitrust pro­ of the Government's position, to restrain ceeding wherein a consent decree was en- prosecution, of the pending suits in the

¶ 67,813 Copyright 1954, Commerce Clearing House; Inc. Cited 1954 Trade 69,645 FTC

several district courts and take upon itself construing and interpreting the· meaning the adjudication of the controversy between of the judgment passed in these proceed­ the defendants when that controversy in- ings, as applied to the pleadings and factual volves issues, such as the right to recover record subsequently to be developed in under quantum meruit or infringement, as those courts, and rule thereon accordingly. alleged, when the Government as the sole I do not find the situation before us protector of the public interest in litigation as one requiring this court to spell out of this character does not join the peti- in supplementation of its original decree tioner in such request for this court to do every conceivable type of litigation which so, put by inference at least suggests that might develop between the defendants and it is beyond the scope of the decree handed presumed to have grown out of the relation- down in these proceedings, I do not appre- ship stricken down. Neither do I find the ciate. If this court restrained the prosecu- existing situation to be one calling for tion of the pending suits, to the extent that resort to Article X of the judgment of this the Government's position lands the re- court in order to construe carry out, or covery sought herein to be within that enforce said judgment Inherent power prohibited by the final decree, the right rests with this court always in proceedings if any, to the petitioning defendant, USG, of this character to enforce its judgments to recover under quantum-meruit or in- when such appears advisable. I do not fringement would have remained for adjudi- however, find need for the application of cation, in the district courts. Thus, the 5.Uits pending therein would continue as such power in these proceedings. presently docketed for trial Also, the In the light of the foregoing expression several district courts wherein the suits of my views, I find it unnecessary to dis­ areare now pending are quite capable of cuss other points argued in the case.