United States v. United States Gypsum Co., 340 U.S. 76 (1950)

United States v. United States Gypsum Co.

No. 30

Argued October 19, 1950
Decided November 27, 1950
340 U.S. 76

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Syllabus

1. On the remand ordered by this Court in United States v. United States Gypsum Co., 333 U.S. 364, of this suit to enjoin violations of the Sherman Act, the District Court entered a summary judgment for the United States. The District Court found that the defendants had acted in concert to restrain trade and fix prices in the gypsum board industry in the eastern territory of the United States, and had monopolized that industry, in violation of §§ 1 and 2 of the Sherman Act.

Held:

(a) The previous decision of this Court, 333 U.S. 364, justified a summary judgment for the United States on the issue of the violation of the Sherman Act when the record was considered in the light of this Court’s opinion and defendants’ offer of proof on the remand. P. 82.

(b) To establish a violation of the Sherman Act, it was sufficient to show that the defendants, constituting all former competitors in an entire industry, had acted in concert to restrain commerce in an entire industry under patent licenses in order to organize the industry and stabilize prices. It was not necessary then or now to decide whether a mere plurality of licenses, each containing a price-fixing provision, violates the Sherman Act. Pp. 84-85.

(c) On the remand, the defendants were entitled to introduce any evidence from which all or any of them might be found not to have violated the Sherman Act, and they had a right to lay before the court facts that were pertinent to the court’s decision on the terms of the decree; but the trial court was not required to admit evidence that would not affect the outcome of the proceedings. P. 85.

(d) A summary judgment, under Rule 56 of the Federal Rules of Civil Procedure, was permissible on the remand. P. 86.

(e) Upon the evidence introduced by the Government and that proffered by the defendants, a finding that defendants had not violated the Sherman Act would have been clearly erroneous, in view of the concert of action to fix industry prices by the terms of the patent licenses. Pp. 86-87.

(f) The District Court’s preliminary statement and summary decree are construed as an adjudication of violation of the Sherman Act by the action in concert of the defendants through the fixed-price licenses, accepting as true the underlying facts in the defendants’ proffer of proof, and that conclusion entitled the Government only to relief based on that finding and the proffered facts. Pp. 87-88.

2. Upon a finding of conspiracy in restraint of trade and a monopoly in a civil proceeding under the Sherman Act, the trial court has the duty to compel action by the conspirators that will, so far as practicable, cure the ill effects of the illegal conduct and assure the public freedom from its continuance. P. 88.

3. The relief which the trial court may afford from violations of the Sherman Act is not limited to prohibition of the proven means by which the evil was accomplished, but may range broadly through practices connected with acts actually found to be illegal; even acts which may be entirely proper when viewed alone may be prohibited. Pp. 88-89.

4. Participants in a conspiracy in violation of the Sherman Act should, so far as practicable, be denied future benefits from their forbidden conduct. P. 89.

5. While the determination of the scope of a decree in a Sherman Act case is peculiarly the responsibility of the trial court, this Court may intervene when there are inappropriate provisions in the decree. P. 89.

6. In resolving doubts as to the desirability of including in an antitrust decree provisions designed to restore future freedom of trade, the courts should give weight to the fact of conviction, as well as to the circumstances under which the illegal acts occur. Acts in disregard of law call for repression by sterner measures than where the conduct could reasonably have been thought permissible. Pp. 89-90.

7. Upon consideration of the Government’s proposed amendments to the decree of the District Court in this case, held:

(a) The decree’s definition of gypsum board is too restrictive, and the words "and embodying any of the inventions or improvements set forth and claimed in any of the Patents" should be stricken if the definition is used. P. 90.

(b) Although the complaint of Sherman Act violation was restricted to the eastern territory of the United States and the evidence applied only to that area, the close similarity between interstate commerce violations of the Sherman Act in eastern territory and western territory justifies the enlargement of the geographical scope of the decree to include all interstate commerce. P. 90.

(c) The decree should be extended to include all gypsum products, instead of patented gypsum board alone. Pp. 90-91.

(d) The decree should forbid standardization of trade practices through concerted agreement. P. 91.

(e) The decree should forbid concerted use of delivered price systems, but, in order to avoid any possibility that an individual’s meeting of competitors’ prices may be construed as a contempt of the decree, the proposed provision relative to delivered price systems should read as follows:

5. Agreeing upon any plan of selling or quoting gypsum products at prices calculated or determined pursuant to a delivered price plan which results in identical prices or price quotations at given points of sales or quotation by defendants using such plan.

Pp. 91-92.

(f) In this case, there should be no requirement of reciprocal grants under patents, but the United States Gypsum Company should be required to license all its patents in the gypsum products field to all applicants on equal terms. Pp. 93-94.

(g) Whether the term for compulsory licensing of new patents should be five years or a longer period with a privilege to the appellees to move for a limitation is in the discretion of the District Court, which should provide for its determination of a reasonable royalty either in each instance of failure to agree or by an approved form or by any other plan in its discretion. P. 94.

(h) The decree should not place upon the United States Gypsum Company the burden of establishing the reasonableness of the requested royalty, and this Court does not now decide where the burden of proof of value lies or who has the duty to go forward with the evidence in any particular instance. P. 94.

(i) The Government’s proposed provision that the decree shall not be taken as preventing an "applicant" (here construed as meaning licensee) attacking the patent or as importing value to it should be omitted, leaving the parties to existing rules of law. P. 94.

(j) The Government’s suggested provisions for inspection of licensees’ books and reports to licensor are approved. P. 95.

(k) There should be included in the decree a provision granting the Government access to the records and personnel of the defendants for the purpose of advising the Government with respect to defendants’ compliance with the judgment. P. 95.

(l) The provisions of Article of the decree are adequate to bar the individual defendants, who signed the questioned agreements in their capacities as officials of the companies, from engaging in similar conspiracies. P. 95.

(m) This Court sees no reason to interfere with the discretion of the District Court in assessing the defendant companies 50%, rather than 100%, of the costs to be taxed in the proceeding. P. 95.

Reversed and remanded.

From a decree of a three-judge District Court enjoining violations of the Sherman Act, the United States appealed directly to this Court. Article III of the decree, finding that the defendants had violated the Sherman Act, was affirmed by this Court. 339 U.S. 960. The issues left for determination were those raised by the United States upon objections to provisions of the decree. Reversed and remanded, p. 95.