FAD Andrea, Inc. v. Radio Corporation of America, 1129.
| Citation | 14 F. Supp. 226 |
| Decision Date | 24 March 1936 |
| Docket Number | No. 1129.,1129. |
| Parties | F. A. D. ANDREA, Inc., v. RADIO CORPORATION OF AMERICA. |
| Court | United States District Courts. 3th Circuit. United States District Court (Delaware) |
William G. Mahaffy, of Wilmington, Del., and Thomas G. Haight, of Jersey City, N. J., for plaintiff.
Darby & Darby, of New York City, and E. Ennalls Berl, of Wilmington, Del., for defendant.
This is a motion to dismiss the bill of complaint for failing to state a ground of equitable relief. The bill is brought by F. A. D. Andrea, Inc., under section 16 of the Clayton Act (15 U.S.C.A. § 26), to compel Radio Corporation of America to grant a license to plaintiff under numerous patents.
As the legal sufficiency of the facts alleged is challenged, it is appropriate to consider the pleading. Plaintiff avers in its bill of complaint that in 1919 defendant entered into a conspiracy with Western Electric Company, Inc., the International Telegraph Company, the United Fruit Company, the Wireless Specialty Apparatus Company, General Electric Company, American Telephone & Telegraph Company, Westinghouse Electric & Manufacturing Company, and others to obtain and maintain a monopoly and to unreasonably restrain trade and to substantially lessen competition in interstate and foreign commerce in radio apparatus and particularly in the manufacture, sale, and shipment in interstate and foreign commerce of radio broadcast receivers, all in violation of section 1 of the Sherman Anti-Trust Act, 15 U.S.C.A. § 1; that all United States patents owned or controlled by said parties to the conspiracy were pooled, and, by written agreements, cross-licenses under the patents were exchanged by the parties to the conspiracy; that by virtue of the pooling of the patents defendant was placed in a dominating and controlling position, which it now holds, whereby a license under all of the patents of the corporations above named could be acquired only from defendant, all in violation of section 2 of the Sherman Anti-Trust Act, 15 U.S.C.A. § 2; that by virtue of the conspiracy, pooling of patents, and the said agreements, and the vesting only in defendant of the right to grant a license under all of the patents of the pool, defendant became and now is in a completely dominating and controlling position in the industry relating to the manufacture and sale of radio broadcast receivers, which position defendant has utilized to restrain trade and lessen competition in interstate commerce and now maintains a monopoly therein; that defendant has granted licenses to a number of manufacturers of radio broadcast receivers under all of the patents of the said pool; that in January, 1935, plaintiff made application to defendant for a license under all of the patents of the pool on the same terms and conditions under which defendant had granted licenses to other manufacturers of radio broadcast receivers; that in February, 1935, defendant refused to grant plaintiff the said license. Further: "That by reason of the said conspiracy aforesaid, in violation of section 1 of the Sherman Act, and of the dominating and controlling position defendant obtained thereby and now holds, in violation of section 2 of the Sherman Act; and by reason of the said patent pool, and the said cross license agreements under the said patents thereof; and by reason of defendant thereby being vested with the dominating and controlling position in the industry relating to the manufacture of radio broadcast receivers, and the exclusive position of granting licenses under all of the said patents of the said pool; and by reason of the granting of licenses thereunder to a substantial number of manufacturers of radio broadcast receivers; and by reason of defendant's refusal to grant a similar license to plaintiff, plaintiff has been prevented from engaging in the manufacture and sale of radio broadcast receivers in interstate commerce, and has been damaged and subjected to loss by the loss of business which it otherwise could and would have obtained; and is threatened with complete loss of its trade and commerce with foreign nations."
As relief plaintiff prays: "For an injunction restraining defendant from refusing to grant plaintiff a license under the patents of the said patent pool on the same terms, in the same fields, and to the same extent for which defendant has granted licenses thereunder to other manufacturers of radio broadcast receivers; or, in the alternative, a mandatory injunction requiring defendant to grant plaintiff such a license."
The Clayton Act § 16, provides: "Any person, firm, corporation, or association shall be entitled to sue for and have injunctive relief, in any court of the United States having jurisdiction over the parties, against threatened loss or damage by a violation of the antitrust laws, including sections 13, 14, 18, and 19 of this chapter, when and under the same conditions and principles as injunctive relief against threatened conduct that will cause loss or damage is granted by courts of equity, under the rules governing such proceedings." 15 U.S.C.A. § 26.
Plaintiff asks this court to direct defendant to grant to plaintiff a patent license. Plaintiff contends that under section 16 of the Clayton Act any corporation is entitled to sue for injunctive relief against threatened loss from a violation of the anti-trust laws and that plaintiff is entitled to injunctive relief from the thing that threatens it with loss; that the pooling of the patents with cross-licenses placed defendant in a dominating and controlling position in the industry and violated the anti-trust laws; that defendant's refusal to license plaintiff occasioned loss and damage. At the hearing of the motion to dismiss the bill of complaint, plaintiff's counsel stated "that the injunctive relief that we asked for is that we be granted a license under that patent." And further stated: "I confess my only authority for that is that one sentence." The one sentence to which counsel referred is a sentence in an opinion of Mr. Justice Brandeis: "Unless the industry is dominated, or interstate commerce directly restrained, the Sherman Act does not require cross-licensing patentees to license at reasonable rates others engaged in interstate commerce." Standard Oil Co. v. United States, 283 U.S. 163, 172, 51 S. Ct. 421, 425, 75 L.Ed. 926. A proper interpretation of this language, says plaintiff, is that the Sherman Act requires cross-licensing patentees to license others at reasonable rates where the industry is dominated by cross-licensing patentees. Counsel further stated: ...
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