Straight Side Basket Corporation v. Webster Basket Co.
|17 February 1936
|STRAIGHT SIDE BASKET CORPORATION v. WEBSTER BASKET CO., Inc.
|U.S. Court of Appeals — Second Circuit
Van Duser & Liebschutz, of Rochester, N. Y. (Samuel B. Dicker and David H. Shearer, both of Rochester, N. Y., of counsel), for appellant.
Edwin T. Bean, and Richard W. Treverton, both of Buffalo, N. Y., and Gray & Gray, of Benton Harbor, Mich., for appellee.
Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
The plaintiff granted licenses to the defendant under patents covering machine attachments, for making baskets of the kind commonly used in packing and selling fruit, and processes of manufacture. The defendant manufactured baskets under the license agreements, but has paid only part of the royalties which have accrued in accordance with the terms of the licenses.
There are two causes of action. The first is based upon five licenses each for one machine attachment for making the so-called "Straight Side" type of basket. There is no dispute as to the amount due, provided the licenses are not invalid because in unlawful restraint of trade. The second cause of action is to recover a disputed amount claimed due under another license for making the "E-Z-Pak" basket. The plaintiff recovered on both causes of action, which will be discussed separately.
The defenses to the first cause of action are (1) invalidity and (2) breach by the plaintiff in failing diligently to prosecute infringers as agreed. A preliminary motion to strike out the first defense was denied before the case was tried on the merits by the court without a jury.
The plaintiff neither manufactures nor sells baskets, but licenses others, of which defendant is one, to do that under its patents. Each of the five licenses to the defendant provided that: "Licensee agrees not * * * to sell any such baskets for less than the fair market price thereof, and on such terms and conditions as Licensor may from time to time, decide are just and equitable." The plaintiff did from the first and until August 29, 1930, issue lists of prices at which the defendant should sell without any attempt to control prices beyond that. On the above date, however, it sent out what was called bulletin No. 18, in which it proposed to control the prices at which "authorized dealers" purchasing from the defendant might resell by requiring its licensees to enter into price-fixing contracts with such authorized dealers. It then requested the assent of the defendant to the proposed plan. The defendant did not agree to it and did not make any authorized dealer contracts in accordance with it. Later the plaintiff sent out several notices in which it insisted that the plan proposed for controlling sales by authorized dealers should be adopted and followed, but this defendant never did it. The trial court found that the licensee agreements at their inception were not illegal and that they did not become so by virtue of the plaintiff's efforts to have the defendant set up the authorized dealer plan.
The original licenses provided in the portion above quoted for the establishment of prices by the plaintiff at which the defendant might sell the baskets it made thereunder. That was lawful. E. Bement & Sons v. National Harrow Co., 186 U.S. 70, 22 S.Ct. 747, 46 L.Ed. 1058; United States v. General Electric Co. et al., 272 U.S. 476, 47 S.Ct. 192, 71 L.Ed. 362. The defendant consented to be bound by the prices established by the plaintiff in so far as its own sales were concerned, but it did not expressly agree to hold its purchasers to any price at...
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