Hartford-Empire Co. v. United States

Mr. Justice Roberts

delivered the opinion of the Court.

Subsequent to the announcement of the decision of the court in the above cases, the United States filed a petition for clarification, or reconsideration.

*571 We have no occasion to reconsider the opinion as respects the necessity for modification of the decree entered by the District Court. In the many cases which have come here for review of decrees in suits brought by the Government for violation of the Sherman Law, it has never been suggested that this court must accept the decree fashioned by the trial court, if we affirm that court’s findings as to violation of the statute, and cannot modify the terms of relief as drafted by the court below. The practice has been the contrary.1 This is not only in conformity to the unquestioned power of an appellate court in an equity cause, but because in suits under the Sherman Act, it is unthinkable that Congress has entrusted the enforcement of a statute of such far-reaching importance to the judgment of a single judge, without review of the relief granted or denied by him.

In order that there may be no misunderstanding we think it well to add to the opinion in the following particulars.

1. The opinion states (p. 411):

“The royalties paid to the receiver by Hartford’s lessees may, unless the District Court finds that Hartford has, since the entry of the receivership decree, violated the anti-trust laws, or acted contrary to the terms of the final decree as modified by this opinion, be paid over to Hartford. In any event Hartford should receive out of these royalties compensation on a quantum meruit basis, for services rendered to lessees.”

*572 The Government points out that had it not been for the receivership, many of the licensees (most of whom were not parties to the proceeding) would have paid no further royalties to Hartford, and that they may be able to justify refusal of payment of any royalties from the date of the receivership, and ought not to be put into the position of recovering royalties paid to the receiver, from Hartford.

It has been open to each of these licensees at any time to repudiate its lease and license, to return the leased machinery, to refuse to pay further rentals or royalties, and to defend any suit arising out of such refusal to pay, either for infringement or otherwise. It may be that licensees have not taken this course because they relied on the decree as entered by the District Court. In such reliance they may have expected that the moneys paid the receiver would be repaid to them.

In view of the modifications required by the opinion of this court, such licensees must pay reasonable rental and service charges on a quantum meruit basis (leaving out of consideration any amount otherwise payable for the privilege of practicing the patented inventions involved) in respect of the machines used in the interim. Unless Hartford, since the entry of the decree by the District Court, has been guilty of some added violation of the anti-trust laws, licensees must elect (a) to remain licensees on such reasonable rental and royalty basis for the future as the District Court may fix, or (b) repudiate the leases and litigate their rights as against Hartford to retain any .portion of the rents and royalties paid. Depending upon such election of each of the lessees, the District Court may, on the application of each, make an appropriate order for the disposition of the fund in the light of the licensees’ election and the principles stated in the opinion of this Court.

2. The Government expresses apprehension lest the statement in the opinion that the decree of the District *573 Court is vacated and the cause remanded for further proceedings would result in the existence of no judgment in effect in the interval between the issue of this court’s mandate and the formulation of a new decree by the District Court. We need only say that the decree from which the appeal was taken stands until further order or orders are entered by the District Court pursuant to mandate.

3. In various portions of the opinion direction is given for provisions in the decree relating to “feeders, formers, stackers and lehrs, and patents covering these or improvements of them, or methods or processes used in connection with them . . .” It is said that this phraseology may omit the Owens and Hartford suction machine patents, including O’Neill suction patents acquired by Owens. The language used was intended to cover such suction machines.

4. The opinion states (p. 419):

“Hartford and the other corporate defendants mentioned in paragraph 24 should be required to lease or license glass making machinery of the classes each now manufactures to any who may desire to take licenses . . .”

It is suggested that this language might permit Hartford to cancel all its leases and retake the leased machinery.

That was not intended by the language used. It was intended that if persons desired to take a license instead of taking a lease, and Hartford were willing to license without leasing machinery, this might be done on reasonable terms. Hartford should of course be compelled to lease machinery covered by its patents according to its past practice, on reasonable terms, and should be required to license the patents involved for manufacture and use or sale, also on reasonable terms.

5. The Government finds some dubiety in the phrase, relating to revision of paragraph 24 (a) of the District *574 Court’s decree, viz., “should be required to lease or license glass making machinery of the classes each now manufactures to any who may desire to take licenses.” The language is amended to add after the word “manufactures” the words “or leases.”

6. The Government suggests that the opinion should be clarified to permit independent machinery manufacturers to obtain licenses. The opinion is so modified, and the corporate defendants are required to license all applicants to make, use, or sell the patented machines at reasonable royalties.

7. The Government apprehends that the use of the word “standard” with respect to the royalties to be charged by Hartford may be taken as a determination that present royalties are reasonable. To avoid any misunderstanding we substitute for the phrase “standard royalties” the phrase “uniform reasonable royalties.” Such uniform reasonable royalties may include rental of the machines, the servicing of the machines, or the use of the patents for the production of glassware on the leased machines, the licensee to have the option at his election to take and pay for any or all of these privileges. Hartford should also be required to license the patents for manufacture for use or sale, but with the limitation that similar licenses at uniform reasonable royalties must be available to all who desire them.

8. The Government desires that power be reserved to the District Court to dissolve Hartford.

The District Court, in its opinion, concluded, and we think properly, that in the situation presented a dissolution of Hartford and a distribution of its patents into various hands would create a worse situation than that envisaged by the District Court’s decree. We think this is .equally true of the status to be established by the modification of the decree required by our opinion. The opinion did not disturb paragraph 57 (A) of the decree entered *575 below. If it be found that a decree entered in accordance with this court’s opinion has failed to bring about a correction of the violations of the anti-trust law which are the basis of the relief granted, it will of course be open to the Government, on a proper showing, to apply for further or other relief.

Me. Justice Douglas, Mr. Justice Muephy and Mr. Justice Jackson took no part in the consideration or decision of this case.

Swift & Co. v. United States, 196 U. S. 375, 396; Harriman v. Northern Securities Co., 197 U. S. 244; Standard Oil Co. v. United States, 221 U. S. 1, 81; United States v. American Tobacco Co., 221 U. S. 106, 184; United States v. Terminal Railroad Assn., 224 U. S. 383, 409; United States v. Union Pacific R. Co., 226 U. S. 470; United States v. Swift & Co., 286 U. S. 106; Local 167 v. United States, 291 U. S. 293, 299; Sugar Institute v. United States, 297 U. S. 553, 602; United States v. Univis Lens Co., 316 U. S. 241, 254; United States v. Bausch & Lomb Optical Co., 321 U. S. 707, 723-728.